Toshiba finalises deal to sell image sensor business to Sony Corp

Toshiba Corp today struck a deal to sell its image sensor business to Sony Corp as part of the Japanese company's restructuring plan in wake of the accounting scandal.

The two companies did not disclose the financial terms of the deal, but Reuters reported that the deal is worth around ¥20 billion ($166 million).

The deal includes Toshiba's image sensor manufacturing facility in Oita, south Japan, as well as Toshiba's 1,100 engineering and design staff at the plant.

Following the transfer, Sony plans to operate the site as a production facility of its subsidiary Sony Semiconductor Corporation, primarily for manufacturing CMOS image sensors.

Image sensors are part of Toshiba's system LSI semiconductor business and are used for various applications such as smartphones, tablet PCs, surveillance cameras, automotive cameras and digital cameras.

Toshiba, which has its image sensor manufacturing plant in Oita, southern Japan, plans to exit the sensor business as per its restructuring plan after it was revealed that it overstated earnings by $1.3 billion over the last seven years (See: Toshiba's president Hisao Tanaka, two others resign over accounting scandal).

Toshiba, whose businesses presence spans a wide range of sectors from home electronics to nuclear power stations, this year sold its 4.6-per cent stake in Finnish elevator maker Kone Oyj for $946 million.

Sony, which is already a leader in the global image sensor market with a 40-per cent share, would become a dominant player with the acquisition and be on a better footing against its rival like Samsung.

It has already this year expanded its image sensor plants in Nagasaki and Yamagata at a cost of more than $1.2 billion. Its customers include China's Xiaomi, Apple, and India's Micromax Informatix Ltd.

This acquisition will allow Sony to increase its production capabilities in the area of CMOS image sensors, where further market growth is anticipated.

Withdrawing from the CMOS image sensors business will allow Toshiba to devote its resources to products where it has a high technological advantage, and aim to improve the profitability of its system LSI business.

Toshiba and Sony aim to complete the transfer within the fiscal year ending 31 March 2016, subject to any required regulatory approvals.