Toshiba confirmed Wednesday it is considering spinning off its flash memory business.
The company said in a statement that it considers its flash memory unit to be integral to the company and is evaluating the possibility of splitting it into a different company.
News agency Kyodo reported that Toshiba is talking to US storage firm Western Digital for the partial sale in which Toshiba will retain 50 percent of its shares.
Toshiba's NAND-type flash memory, used in devices such as smart phones, enjoys a leading global market share with an estimated worth of 2 trillion yen (about $1.7 billion), according to Kyodo.
Western Digital has invested in chip production and Toshiba will consider maintaining the partnership following the split.
The spin-off is aimed at making up for the devaluation of its assets worth millions which Toshiba is expected to suffer with the buyout of a US nuclear energy company in 2015.
Toshiba, which is still reeling from a profit peddling scandal by its former board of directors, said in December that it could suffer a loss of assets worth millions related to the purchase of CB&I Stone & Webster.
Meanwhile, the announcement encouraged investors in the Japanese market leading Toshiba's shares to recover by 5 percent.