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Tata strengthens iPhone making operations with Pegatron ( PGTRF )

deal

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Tata seals 60-40 JV with Pegatron ( PGTRF ) for iPhone plant,

sources say

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Apple ( AAPL ) sees India as a key market, diversifying beyond

China

By Munsif Vengattil and Aditya Kalra

NEW DELHI, Nov 17 (Reuters) - India's Tata Electronics

has agreed to buy a majority stake in Taiwanese contract

manufacturer Pegatron's ( PGTRF ) only iPhone plant in India, forming a

new joint venture that strengthens Tata's position as an Apple ( AAPL )

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 ( PGTRF ) 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 ( AAPL ) and Pegatron ( PGTRF ) did not

respond to Reuters queries on Sunday.

Reuters was first to report in April that Pegatron ( PGTRF )

had the backing of Apple ( AAPL ) 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 ) partnership.

Apple ( AAPL ) 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

.

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 ( WICOF ) 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.

(Reporting by Munsif Vengattil and Aditya Kalra; Editing by

Lincoln Feast.)