Aion uses Equihash PoW but with custom parameters of 210,9 (instead of 200,9 as used in Zcash): https://github.com/aionnetwork/aion_miner/wiki/Aion-equihash_210_9--specification-and-migration-guide.
the amount of memory has been more than doubled from 144 MB to 300 MB based on some set of experimental parameters though the reference implementation uses over 500 MB.
Aion’s rationale for choosing Equihash:
One of the core benefits of the Equihash algorithm, is its memory hard property for increased ASIC resistance… In order to increase Aion PoW algorithm’s resistance to future ASIC designs… The implementation of 210,9 as the parameters set for Aion’s Equihash2109, doubles the amount of memory required. https://blog.aion.network/aionminermodule-fe82196eeab4 (Feb 2018)
The chip company have also just today submitted a proposal for a Zcash foundation grant. https://github.com/ZcashFoundation/GrantProposals-2018Q2/issues/18
ASICs will be apart of the long term vision… 4 months to release the Equihash design and at the end of 6 months, have several solutions on how to keep hardware decentralized so the community can decide how to proceed.
So in summary: Aion selected equihash and tweaked the parameters for improved Asic resistance, then partnered with a chip company to prototype an FPGA miner, and the chip company now seeks funding from the Zcash foundation to develop an ASIC design for equihash. Meanwhile Aion will replace its PoW with a delegated proof of stake system.