Standard ImageIO allows you to read regions of (large) images without reading the entire image into memory first.
Rectangle sourceRegion = new Rectangle(x, y, w, h); // The region you want to extract
ImageInputStream stream = ImageIO.createImageInputStream(input); // File or input stream
Iterator<ImageReader> readers = ImageIO.getImageReaders(stream);
if (readers.hasNext()) {
ImageReader reader = readers.next();
reader.setInput(stream);
ImageReadParam param = reader.getDefaultReadParam();
param.setSourceRegion(sourceRegion); // Set region
BufferedImage image = reader.read(0, param); // Will read only the region specified
}