Bankrupt flash memory chips maker Spansion Inc (SPSNQ.PK) said it had agreed to sell its manufacturing facility in China to Taiwan's Powertech Technology Inc (6239.TW) for about $31 million in cash as part of its reorganization plan.

The Suzhou facility, with about 565 workers, was one of its four factories, the company said in a statement on Monday.

Spansion, which filed for bankruptcy in March, said the move was aimed at lowering its fixed costs and shifting to a more variable, outsourced manufacturing model.

The company competes with Samsung Electronics (005930.KS) and Toshiba Corp (6502.T) in flash memory, which allows a device to retain data even when its power is turned off.

The sale is yet to be approved by the U.S. bankruptcy court.

Spansion has said it plans to emerge from Chapter 11 bankruptcy in the fourth quarter.

The case is In re: Spansion Inc, U.S. Bankruptcy Court, District of Delaware, No. 09-10690. (Reporting by Santosh Nadgir in Bangalore; Editing by Ranjit Gangadharan)

China