Tata seals deal with Pegatron for iPhone plant in India's Tamil Nadu, sources say

NEW DELHI: India's Tata Electronics has agreed to buy a majority stake in Taiwanese contract manufacturer Pegatron's only iPhone plant in India, forming a new joint venture that strengthens Tata's position as an Apple supplier, two sources told Reuters.

Under the deal announced internally last week, Tata will hold 60% and run daily operations under the joint venture, while Pegatron will hold the rest and provide technical support, said the two sources, who declined to be named as the details are not yet public.

The sources did not elaborate on the financials of the deal.

Tata declined to comment, while Apple and Pegatron did not respond to Reuters queries on Sunday.

Reuters was first to report in April that Pegatron 4938.TW had the backing of Apple and was holding advanced talks to sell its only iPhone plant in India to Tata, marking the Taiwanese firm's latest scale back of its Apple AAPL.O partnership.

Apple is increasingly looking to diversify its supply chain beyond China amid geopolitical tensions between Beijing and Washington. For India's Tata, the Chennai Pegatron plant will bolster its iPhone manufacturing plans.

Tata is one of the largest conglomerates in India and has been fast expanding into iPhone manufacturing, rivaling the only other iPhone contract manufacturer operating in India, Foxconn 2317.TW.

The announcement for the deal's closure was made internally at the iPhone plant on Friday, said the first source.

The second source said the two companies plan to file for an approval of the Competition Commission of India (CCI) in the coming days.

Tata already operates an iPhone assembly plant in the southern state of Karnataka, which it took over from Taiwan's Wistron 3231.TW last year. It is also building another in Hosur in Tamil Nadu, where it also has an iPhone component plant which was involved in a fire incident in September.

Analysts estimate India will contribute 20-25% of total iPhone shipments this year, from 12-14% last year.

The Tata-Pegatron plant, which has around 10,000 employees and makes 5 million iPhones annually, will be Tata's third iPhone factory in India.