The drastic step will be only one of many tough choices the Japanese conglomerate must take to survive, as the proceeds are set to cover just part of the charge for cost overruns at a newly acquired US power plant construction business - a figure that local media has put at 680 billion yen (US$6 billion).
Toshiba's memory chip business - the world's biggest NAND flash memory producer after Samsung Electronics - is its crown jewel, accounting for the bulk of its operating profit.
Toshiba is looking to sell roughly 20% for more than 200 billion yen and potential investors include private equity firms as well as business partner Western Digital Corp and the government-backed Development Bank of Japan (DBJ), sources have said.
It aims to complete the sale by the end of the financial year in March as failure to do so will likely mean that shareholder equity - whittled down to just US$3 billion in the wake of a 2015 accounting scandal - would be wiped out by the charge.
Mark Newman, an analyst at Sanford Bernstein in Hong Kong, said the move would only be a short-term band-aid.
"The NAND business is the only one with value, as it makes up all of the semi-conductor profits, which comprise 75% of the overall company's profit. I won't be surprised if they sell another 20% in a few years' time and then another 20%."
Toshiba will hold a news conference at 0730 GMT. It may give an estimate of the size of the writedown, a person familiar with the matter has said.
The final figure for the writedown will be announced on Feb 14 when it reports third-quarter results.
Toshiba estimates the value of its memory chip business at 1 trillion-1.5 trillion yen (US$9billion-US$13 billion), a person with direct knowledge of the matter has told Reuters.
The business generated sales of 845.6 billion yen and operating profit of 110 billion yen for the year ended in March 2016.
Toshiba chief executive Satoshi Tsunakawa recently told the company's main creditors of its plans, a person with direct knowledge of the matter has said, adding that Toshiba is also looking at selling other businesses.
Its main banks have agreed to not call in some loans early for now even as recent downgrades of the firm's credit ratings violate some provisions in debt agreements, people with direct knowledge of the matter have said.
Japanese business weekly Toyo Keizai reported that Terry Gou, chief executive of Foxconn, the world's largest contract electronics maker, is interested in either taking a stake in or buying some of Toshiba's businesses.
Foxconn, formally known as Hon Hai Precision Industry Co, is interested in Toshiba's chip and broadcasting equipment business, the weekly said, adding that 8K high definition imaging technology is likely to be the focus of its interest.
A representative for Foxconn had no immediate comment. - Reuters