Kazuo Hirai, president and chief executive officer of Sony (Photo : Kiyoshi Ota/Bloomberg)
Japanese consumer electronics maker, Sony, is looking to acquire the image sensor business of Toshiba for 20 billion yen ($165 million), according to sources close to the deal. Sony's President Kazuo Hirai has been looking to buy the business in order to solidify his company's dominant position for producing chips used for capturing smartphone pictures.
Based in Tokyo, the outcome of the deal may be announced early this week as soon as both Sony and Toshiba reach an agreement on the business deal. Toshiba may be expected to accept the deal based on the fact that it needs to raise money following the accounting scandal that made it lose $1.3 billion from the profits made over a 7-year period.
Sony's president Hirai wants to invest in sensors because he thinks it might raise good returns on the company's consumer electronics, video games, and movies businesses. Sony is one of the market leaders when it comes to making chips that smartphones and cameras use to digitize photos. To this extent, the company might spend as much as 290 billion yen on semiconductors in order to meet demands from Apple and Samsung among other high-profile customers.
"As the possibility of realizing a sale increases, it is positive for both Sony and Toshiba," said Takeo Miyamoto, senior analyst at Mitsubishi UFJ Morgan Stanley Securities Co. "The market was expecting Toshiba to sell its imaging sensor business."
In late Tokyo trading, Sony gained 3.7% to 3,548 yen while Toshiba gained 3.8% to 357.1 yen.
In 2014, Sony was in control of nearly 40% of the CMOS image sensors market which is about $8.7 billion, while Techno comes next with 16% of the market. Market analysts predict the market might rise to $12 billion by 2019, just as Sony looks forward to making 1.5 trillion yen of sales within three years, representing 62% of the market.
Hirai in his turnaround efforts is looking to bring sensors into automotive and other applications in order to develop new markets, and he also looks forward to engaging in cheap technology that processes 1,000 images per second.
Toshiba has been a leader in making nuclear power plants, laptop computers, memory chips, and a host of other technology devices, but following its accounting scandal, the company has been selling assets to raise cash.
Toshiba sold its stake in Topcon, a medical equipment maker, in September for 49 billion yen in order to gain 30 billion yen; and that same month, it consented to sell off its 30% stake in a building it owned for 37 billion yen, even though it had sold its stakes in Kone Oyj, a Finnish elevator maker, for about 113 billion yen.
The company had a low 198,700 employees by March ending, and company's president, Masashi Muromachi, said the company will be cutting down on businesses not performing so well while also pruning down on workforce in its appliances, personal computers, televisions and semiconductors sectors.
