Apple to release cheaper iPhone 4 with a smaller memory 'within weeks'

Apple has begun manufacturing a lower-priced version of its phenomenally popular iPhone 4 with a smaller 8GB flash drive.

The flash drive for the 8GB iPhone 4 is being made by a Korean company, a source told Reuters, 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, as did Samsung.

The existing iPhone 4 was first launched in June 2010 with 16GB and 32GB versions, with a white version added to the line-up in April.

The 8GB version is expected to launch within weeks.

Some analysts said the cheaper 8GB iPhone 4 could help Apple boost sales in emerging markets.

Bonnie Chang, an analyst with Yuanta Securities, said: 'Apple may want to push into the emerging market segment where customers want to switch to low to mid-end smartphones from high-end feature phones.

'So Apple will still need a completely new phone with low specifications for the emerging markets.'

In addition to the launch of the smaller iPhone 4, Apple is thought to be launching the iPhone 5 next month.

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, a source revealed.

The iPhone 5's two manufacturers have been told to prepare production capacity for up to 45million units altogether.

Apple sold 20.34million iPhones in the second quarter and is increasingly looking to Asia to boost future earnings.