Pegatron Corporation (TWSE:4938) is in advanced talks to hand over control of its only iPhone manufacturing facility in India to the Tata Group (Tata Sons Private Limited), said two sources with direct knowledge, marking the Taiwanese firm's latest scale back of its Apple Inc. (NasdaqGS:AAPL) partnership. Under the deal, which has received the backing of Apple, Tata plans to hold at least a 65% stake in a joint venture that will operate the Pegatron plant near Chennai city in the southern Indian state of Tamil Nadu, with the Taiwanese firm providing technical support and holding the rest, one of the sources said. Tata, one the largest conglomerates in India, will operate the joint venture through its Tata Electronics unit, the second source said.

The Pegatron India factory has around 10,000 employees and makes 5 million iPhones annually. It is the last such facility operated by the firm after it forfeited control of an iPhone plant in China last year to rival Luxshare (002475.SZ) in a $290 million deal. Tata and Pegatron did not respond to emailed requests for comments.

Apple declined to comment. The sources did not share financial details of the ongoing negotiations. 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. Pegatron has for months also been building another iPhone factory at its Chennai campus, and the Tata deal talks include taking over that facility as well, the first source said. The talks between Tata and Pegatron for the factory are expected to close in six months and will see all of the Pegatron India employees move to the joint venture entity, the first source added.