Kingston is paying roughly $5 million for 10% of Taiwan's Phison Electronics Corp., a maker of controller chips for USB flash memory drives.

The investment is part of Kingston's expansion into flash memory for consumer electronics and computers, which began in 2003.

Last year, the company carved out the business as its own division, which made up $1 billion of Kingston's $4.5 billion in sales last year.

Kingston makes flash memory cards that go into digital cameras, phones and other devices. The cards add space for pictures, video, screen savers and music.

It also makes USB drives that plug into computers and function as portable storage drives, allowing users to transfer files between computers.

Phison Electronics makes chips that allow USB drives to work with computers. It's believed to supply controller chips to Kingston for its USB drives.

A spokesman for Kingston declined to comment on word of the investment, which was reported in Warren's Computer Electronic Daily, an industry newsletter.

A source familiar with the company said the deal has not yet closed.

The investment could secure supply of and better pricing on controller chips for Kingston.

The chips handle the reading and writing of data on flash drives.

Kingston has been making a big push into consumer flash devices, the fastest-growing part of its business.

It recently started marketing a line of memory cards for wireless phones that are preloaded with games, songs, videos and other files.

The songs and other content help draw customers and afford Kingston more profit on the cards.

The cards are inserted into a small slot on the side of a phone.

Micro security Digital-or microSD-cards were Kingston's top- selling flash memory device during the fourth quarter, according to Mark Leathern, director of business development for flash.

By: DocMemory
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