Toshiba to sell sensor business to Sony for 20 billion yen, overhaul unprofitable semiconductor business

Japanese engineering conglomerate Toshiba announced on Wednesday that it will sell its image sensor business to Sony for a reported 20 billion yen, as it plans to overhaul its semiconductor business, which is still recovering from a $1.3 billion scandal.

Reuters reported that Toshiba will sell its manufacturing plant in Oita to Sony by the end of the 2016 fiscal year. Sony will hire the 1,100 employees from the image sensor plant as agreed by the two companies. Toshiba didn't disclose the exact amount of the deal, but according to reports, it is worth around 20 billion yen, or $116.15 million.

According to the Business Spectator, this deal could strengthen Sony's position as an international leader in image sensor, which is an important part of the smartphone and mobile device industry. Sony dominates 40 percent of the complementary metal oxide semiconductor (CMOS) image sensor market. This is an integrated circuit that turns light into electrical signals.

Sony has been having a hard time trying to earn from the electronics market for years, and now it is trying to make a comeback with image sensors, which seems to be a new cash cow for the Japanese company.

Meanwhile, according to The Wall Street Journal, the accounting scandal that stormed Toshiba caused its president Hisao Tanaka, and seven of its board members to resign. The scandal was brought upon the company when it overstated its profit by more than $1.2 billion for more than seven years. Just last month, Toshiba reported a quarterly loss of $102 million, mostly due to the accounting scandal. This is considered as one of the most damaging accounting scandals in Japan. After the scandal, the company promised to improve its management by bringing more outside directors to lead it.

Toshiba's new chief executive Masashi Muromachi said September that he will overhaul the weaker operations of the company. This includes structural reforms that will be "drastic and without limitations."