In an effort to restructure its semiconductor business and help rebuild its operations hit by an accounting scandal, Toshiba Corp. is finalizing arrangements to sell off its production line for image sensors at a plant in Oita Prefecture to Sony Corp., company sources said Saturday.
The deal, expected to amount to around ¥20 billion, will mark Toshiba’s effective withdrawal from the image sensor business. The plant, in the city of Oita, accounts for most of Toshiba’s output of the product, which is used in smartphone cameras and other devices.
The plant’s image sensor production line mainly produces CMOS image sensors for processing images as part of its system LSI business, the sources said.
As Toshiba will try not to fire the nearly 2,600 employees working at the factory. Some of the workers will be transferred to Sony while others will be moved to Toshiba’s mainstay Yokkaichi factory in Mie Prefecture, which produces NAND flash memory chips, the sources added.
Sony has unveiled a plan to enhance its investment in facilities for the product to meet growing demand by procuring ¥420 billion through public stock offerings and other means.
Sony leads the global market for chips used in smartphones and cameras to take and digitize photos. The company is already quadrupling spending on semiconductors this year to ¥290 billion to meet demand for the sensors from customers including Apple Inc. and Samsung Electronics Co.
Following the scandal in which Toshiba padded profits over several years, leading it to lag in restructuring loss-making businesses, President Masashi Muromachi has indicated there are plans to restructure the semiconductor and home appliance businesses with an announcement that could come as early as November.
The scandal has forced its three successive presidents to step down from their executive posts, and caused the company to revise downward its profits for the period from April 2008 to December 2014 by a total of ¥224.8 billion on a pretax basis and ¥155.2 billion on a net basis.
Sony controlled about 40 percent of the $8.7 billion image sensor market last year, compared with about 16 percent for its next biggest competitor, Techno System Research estimates. The market is forecast to rise to about $12 billion by 2019, and the company expects its sales to climb as much as 62 percent to ¥1.5 trillion in three years.
A Japan Inc. stalwart, Toshiba makes everything from nuclear power plants to laptop computers and memory chips.
In September, the company sold its stake in medical equipment maker Topcon Corp. in a ¥49 billion deal for a gain of about ¥30 billion.
Also in September, Toshiba agreed to sell a 30 percent stake in a building it owns for ¥37 billion and prior to that sold its 4.6 percent stake in Finnish elevator and escalator maker Kone Oyj, for a gain of about ¥113 billion.
Muromachi in September pledged to prune underperforming businesses, including workforce reductions in appliances, personal computers, televisions and semiconductors.
Toshiba had about 198,700 employees as of March 31, the lowest since at least 2009, according to data compiled by Bloomberg.
About ¥491 billion of Toshiba’s market value has vanished since the company withdrew its earnings forecast in May and announced an accounting probe that was later expanded.
The Tokyo Stock Exchange has fined the conglomerate ¥91 million for the profit misstatements.