Apple Inc's Asian suppliers building cheaper iPhone 4

The flash drive for the 8GB iPhone 4 is being manufactured by a Korean company, one of the people said on Tuesday, declining to name the company. Apple currently sources its flash drives from Japan’s Toshiba and South Korea's Samsung Electronics.

Apple, which demands high levels of secrecy and security from suppliers and employees, declined to comment. Samsung also declined to comment. The existing iPhone 4 was first launched in June 2010 with 16 GB and 32 GB versions, with a white version added to the lineup in April. The 8GB version is expected to launch within weeks, sources said.

In addition to the launch of smaller iPhone 4, Apple is targeting an end-September launch for the next-generation iPhone 5, one source said. The new iPhone, which some call the iPhone 4S because of its largely identical appearance to the existing iPhone 4, will have a bigger touch screen, better antenna and an 8-megapixel camera, one of the people said.

The iPhone 5’s two manufacturers have been told to prepare production capacity for up to 45 million units altogether, the source said. The phone will be made by Hon Hai and Pegatron, the person added.