The move, which comes as Toshiba gets serious about restructuring after a damaging accounting scandal, would cede some of its production facilities in the southern Japanese city of Oita. Sony would gain an even firmer position as global leader in image sensors used in smartphones and other camera-equipped electronics.
Semiconductors make up the core of Toshiba's electronic devices and components segment, which generated a quarter of the group's 6.65 trillion yen in fiscal 2014 revenue. But nearly all of this segment's profit comes from NAND flash memory. Neither the category known as system LSI -- which includes image sensors -- nor discrete semiconductors have contributed much to earnings.
Improper accounting methods made these and other product lines, including appliances and personal computers, seem more profitable than they are, delaying structural reforms.
Negotiations on the sale have reached an advanced stage. Toshiba is looking to divest its newest production facility in Oita, which can handle 300mm wafers. Its products include CMOS -- complementary metal-oxide semiconductor -- sensors, an area in which Sony excels. Besides production equipment, Sony would take over some employees as well as customer accounts, which include automakers and camera manufacturers.
Toshiba would in effect withdraw from the image sensor market and concentrate its semiconductor investment on its more competitive memory business. It plans to begin mass-producing expanded-capacity NAND flash memory in Yokkaichi, near Nagoya, in the first quarter of 2016. President Masashi Muromachi had hinted that the system LSI and discrete semiconductor businesses would be the first to undergo restructuring once a new management team took over in late September.
Sony would use the acquisition to expand its CMOS sensor production capacity. This past summer, the company announced plans to channel the bulk of about 420 billion yen in equity and debt financing into production as well as research and development of these components.
Sony announced plans early this year to increase monthly output by about 30% by September 2016. It is readying for an anticipated surge in demand for image sensors as two-camera phones catch on.
Toshiba's global market share in CMOS sensors came to just 1.9% last year, compared with 40.3% for Sony, according to Tokyo-based Techno Systems Research. Sony's investments in this business will help it fend off rising competition from Samsung Electronics.