Leading designers of graphics processors – ATI Technologies Inc. and Nvidia Corp. – had reportedly ordered niche memory products from Taiwan-based maker ProMos, presumably, in a bid to accelerate their efforts in the market of 3D graphics accelerators for handsets. Additionally, the memory maker may start producing GDDR3 memory chips for consoles.

The chips ordered by ATI and Nvidia are system-in-package (SIP) chips incorporating power-conserving types of synchronous dynamic random access memory (SDRAM) and pseudo static random access memory (SRAM) together with NAND flash memory or NOR flash memory chips, according to The Taiwanese Economic News. Such products, when coupled with Nvidia’s GoForce graphics chips or ATI’s Imageon chips, are likely to be used for handheld applications.

Officials for ATI and Nvidia did not comment on the news-story.

More than 90% of the orders for ProMos’ niche-memory foundry service come from overseas customers. The company reportedly had planned to set aside half of the foundry capacity at its 200mm wafer fab for production of niche-memory chips, including those going into handsets, LCD TVs and game consoles in 2006. Currently, foundry service accounts for 25% of the fab’s operations. The move would boost the fab’s profitability, as prices on DRAM are declining.

The high-performance game consoles of 2006 – Microsoft Xbox 360 and Sony PlayStation 3 will use GDDR3 as well as GDDR3 plus XDR memory respectively. ProMos is unlikely to make XDR memory as it requires a license from Rambus and is generally more expensive to make. According to Mercury Research, a market research firm, the market for high-end graphics memory is expected to grow by 42% in 2006, from $1.1 billion in 2005 to $1.5 billion this year.