The Cupertino, Calif.-based electronics giant has allegedly teamed up with Hitatchi and Sony to create the 4-inch screen for an unspecified Apple device, according to Macotakara.jp, a Japanese tech site.
The device should arrive in 2012, the site says, citing Apple supply chain sources, putting it squarely in the time-frame analysts predict the iPhone 5 should arrive.
If true, the new iPhone would find itself with equal-footing, at least with regards to screen real-estate, as some of its contemporary competitors. Motorola's later Droid models have 4-inch screens, while the smartphones from HTC and Samsung famously sport large screens.
A person familiar with the matter further claimed Apple has invested an unspecified amount in Sharp's factories.
The investment is believed to help support Sharp's production capacity for IGZO (indium, gallium, zinc) LCD panels for the next iPhone and iPad that will allow for thinner designs and improved battery performance.
The IGZO technology is perfect in that it offers near-OLED power consumption while having a lower cost and thinness that is only 25% greater than OLED, based on our checks, said Jeffries analyst Peter Misek.
The move also highlights Apple's souring relations with electronics behemoth Samsung.
The South-Korean company has been a major provider for Apple, providing everything from screens to memory for Apple devices, but its own Galaxy smartphones and tablets are turning it into a head-on rival.
Earlier this week reports surfaced saying Sharp will produce panels for the iPad 3. at its Kameyama No. 2 plant in central Japan.