Phison Electronics reportedly will make an advance payment of NT$300 million (US$9.9 million) to Powerchip Technology for NAND flash, mainly 2Gb chips, with deliveries to be collected through June 2012, according to industry sources.

Most NAND flash producers have moved to phase out low-density chip production, shifting their focus to 16Gb, 32Gb and higher-end products, the sources said. But Powerchip's in-house NAND flash capacity is mainly focused on low-density 2Gb and 4Gb chips, which are still attracting orders from many module and memory card makers, the sources indicated.

Module firm Power Quotient International (PQI) reportedly has also asked for foundry capacity equivalent to 4,000-5,000 12-inch wafers from Powerchip.

But none of the companies confirmed the reports.

Once primarily known for its PC DRAM memory, Powerchip has enhanced its foundry business to include non-DRAM products including NAND flash and LCD driver ICs. The company previously revealed plans to allocate more capacity to production for contract manufacturing orders, with monthly output for the segment set to grow above 50,000 12-inch wafers during the fourth quarter of 2011.

Powerchip currently runs three 12-inch wafer fabs in Taiwan with a combined monthly capacity of 120,000-130,000 units.