Confirming previous reports, Toshiba said on Wednesday it will sell its image sensor business to Sony and overhaul its unprofitable semiconductor businesses. Sony and Toshiba have entered into a non-binding memorandum of understanding that confirms their intent to negotiate the transfer to Sony of certain Toshiba owned semiconductor fabrication facilities, equipment and related assets in Oita Prefecture, and also other related equipment and assets.

The parties intend to transfer fabrication facilities, equipment and related assets of Toshiba's 300mm wafer production line, mainly located at its Oita Operations. Following the transfer, Sony plans to operate the site as a production facility of Sony Semiconductor Corporation, a wholly-owned subsidiary of Sony, primarily for manufacturing CMOS image sensors.

Negotiations between the parties are proceeding with a view to Toshiba outsourcing production of the semiconductor products Toshiba currently manufactures on its 300mm wafer production line to Sony Semiconductor Corporation following the transfer.

The deal was worth around 20 billion yen ($166.15 million), according to a company source familiar with the matter.

The parties also are planning to make arrangements to offer the employees of Toshiba and its affiliates, employed at the manufacturing facilities to be transferred, as well as those involved in areas such as CMOS image sensor engineering and design (approximately 1,100 employees in total), employment within the Sony Group, upon the completion of the transfer.

This acquisition will enable 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 March 31, 2016, subject to any required regulatory approvals.

Toshiba also said it will withdraw from the white light-emitting diode (LED) business, part of its semiconductor division.

The moves amount to the first restructuring steps Toshiba has announced since it said earlier this year that it had overstated earnings in a wide range of businesses including chips, television sets and personal computers over seven years.

For Sony, the acquisition of Toshiba's image sensor business would further solidify its already dominant position in the industry. Sony controls about 40 percent of the market for complementary metal-oxide semiconductor (CMOS) image sensors.