By Josh Ong

Published: 11:20 PM EST (08:20 PM PST)

A pair of reports coming out of the Far East on Tuesday claim that Apple is looking to expand the screen on at least one version of the next-generation iPhone to 4 inches, while also adding an upgraded A5 chip processor to its smartphone offerings and an enhanced version of the A4 to the second-generation iPad.

Size matters

According to Taiwanese industry publication DigiTimes, upstream component suppliers report that Apple will expand the screen size of the fifth-generation iPhone to 4 inches in order to compete with a growing class of 'super phones' in the 4- to 7-inch range. By comparison, the iPhone 4 sports a 3.5-inch display with a resolution of 960 by 640 pixels.

The screen bump could also serve to push the iPhone toward the smaller end of the tablet market. "The component suppliers noted that the production lines for Apple's next generation iPhone have begun testing, and Apple is interesting in expanding the screen size to 4-inches to support the tablet PC market as the vendor only has a 9.7-inch iPad in the market," said the report.

Google Android-based phones appear to be driving the screen race, the report noted. For example, the 5-inch Dell Streak, which has been called a "tweener," has been marketed as a competitor to both the iPad and the iPhone.

If accurate, the DigiTimes report could dovetail with recent rumors of an "iPhone nano," as Apple may be looking to differentiate its iPhone lineup with bigger and smaller displays. Though rumors of a smaller version of the iPhone have persisted for years, recent reports from Bloomberg and The Wall Street Journal of an upcoming cheaper, smaller iPhone have lent credence to the rumors.

A recent unverified report from another Taiwanese website claimed that Apple has built three prototype models for the "iPhone 5," including a version with a "sliding cover" that conceals a keyboard.

A4 and A5

A second report from DigiTimes claims that Apple is hoping to outsource the production of its A4 processor and the next-generation A5 processor, which will likely utilize the ARM Cortex A9 design, to Taiwan Semiconductor Manufacturing Company due to concerns over increased competition between Samsung and Apple. At this week's Mobile World Congress, Samsung has shown a number of new products, such as the Galaxy S II smartphone and the Galaxy Tab 10.1 tablet, that will directly compete with Apple's iPhone and iPad.

Though Apple's A4 processor is currently exclusively produced by Samsung Electronics, Apple has tapped TSMC for help producing the A4 in the past when Samsung's capacity was unable to meet demand for Apple's devices. Sources indicated to DigiTimes that "the move at that time was perhaps to test TSMC's capability."

"According to Digitimes Research," the report continued, "the iPad 2 will support an enhanced version of the A4 and the A5 will power the iPhone 5. TSMC will initially produce the improved A4, and could likely become the exclusive manufacturer of the A5."

The report echoes rumors from January suggesting that the next iPhone will run atop "Apple's new A5 CPU (a Cortex A9-based, multi-core chip)."

DigiTimes, which bases many of its reports off tips from Asian suppliers, has a hit-and-miss track record with Apple predictions, so Tuesday's reports should be taken with a grain of salt.