Chief executive Kazuo Hirai has been on a path of turning around the struggling firm to become profitable and focus on its strengths. Sony has previously spun off its embattled TV business and sold its PC arm. Earlier this year, it decided to spin off its audio and video business.
Currently, the devices division of Sony houses the image sensor business, battery and storage media arms.
A new company called Sony Semiconductor Solutions will be set up and start operations on April 1, 2016. This will contain the semiconductor business which primarily focuses on image sensors.
The battery business will fall to Sony Energy Devices Corporation while the storage media unit will fall under Sony Storage Media and Devices Corporation.
Devices are one of Sony's fastest-growing unites. The business saw operating income hit 30.3 billion yen ($249 million) in the three months to June 30, a 163.8 percent year-on-year rise, primarily driven by image sensors.
The spin-off comes at a time when Sony is struggling in the smartphone space and is looking to focus its business on the most profitable areas.