Toshiba is in talks with Sony for divestment of its image sensor business for JPY20bn ($164.6m).
The potential deal is likely to be the first under the firm’s plan for restructuring lower-margin businesses which was announced earlier this year.
The divestment follows Japan’s stock exchange order in September which had asked the firm to pay a record fine of Y91.2m ($750,000) after a $2bn accounting scandal.
Toshiba reportedly overstated earnings by $1.3bn during fiscal 2008/09.
The firm intends to sell its image sensor manufacturing plant in Oita, southern Japan, to Sony and withdraw from the sensor business entirely, according to anonymous sources, reports Reuters.
The firm is also seeking options for its system LSI semiconductor business and its discrete semiconductor business.
Once concluded, the deal is likely to boost Sony’s production capacity for camera sensors.
Sony already counts among the leaders in the image sensor market with its products used in phones manufactured by Apple, Samsung Electronics and China’s Xiaomi and India’s Micromax Informatix.