By Sam Oliver

Published: 07:50 AM EST (04:50 AM PST)

Despite the high cost of OLED displays and Apple's continued support of LCD screens with IPS technology, rumors of a next-generation iPad with an OLED screen continue to resurface.

Taiwanese trade publication DigiTimes reported on Tuesday that its sources within overseas component makers indicated that Apple plans to launch a second-generation iPad as soon as the fourth quarter of 2010. The new hardware would reportedly use 5.6-inch and 7-inch OLED displays, with Compal Electronics in the running to supply Apple.

The new models would be in addition to Apple's successful 9.7-inch iPad, which would receive "some minor changes," the report said. The smaller 5.6-inch and 7-inch iPad models would "mainly target the e-book reader market, separating them from the 9.7-inch model, which mainly targets multimedia entertainment," the report said.

It noted that costs of OLED panels are expected to drop, as Samsung Electronics and LG Display have been devoting resources into the development of panels. "With Apple's brand image and high average selling price (ASP, Apple should have no problem adopting OLED panels, which have higher price than standard panels, into its devices," the report said.

DigiTimes Research senior analyst Mingchi Kuo responded to the rumors and noted that Samsung cannot currently meet capacity for OLED displays on its own handsets, making it unlikely they would be able to supply Apple by the fourth quarter of 2010. In addition, Compal is "unlikely" to pursue orders with Apple, because its manufacturing gross margins are much less than what is offered by others.

Rumors of an OLED display on the iPad were around long before Apple even formally announced the device. They have continued to resurface since, with DigiTimes also reporting in April that Apple could adopt OLED displays for its second-generation iPad. At the time, the Taiwanese publication also reported the rumors, but simultaneously cast doubt on them through the analysis of Kuo.

The current iPad LCD screen uses IPS, or in-plane switching, technology. It was developed by Hitachi in 1996, and offers improved viewing angles and color reproductions on screens.

Last November, DigiTimes incorrectly said that Apple would offer an OLED version of the iPad at a cost of at least $2,000 at retail, due to the high cost of such displays. A 9.7-inch OLED display currently costs about $500, or the same price as an entire 16GB Wi-Fi iPad.

In April, an analysis of the parts included in the iPad found the current model's LCD screen with IPS technology to be the most expensive component, at an estimated $95. In all, the $499 iPad was said to cost $260 in components.