Toshiba will sell its image sensor manufacturing plant in Oita, southern Japan, to Sony by the end of the fiscal year through March and pull out of the sensor business, the companies said in a joint statement. Sony will take on the sensor business' 1,100 workers, the two companies said.
The deal was worth around 20 billion yen ($166.15 million), according to a company source familiar with the matter. The source requested anonymity because the companies did not disclose the value of the deal publicly.
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 will 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, a type of integrated circuit that converts light into electrical signals.