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Citigroup’s research department says that Amazon is set to follow on from the launch of its Kindle Fire tablet computer with its own mobile phone, AllThingsDigital says. Citigroup analyst Mark Mahaney writes:

Based on our supply chain channel checks in Asia led by Kevin Chang, Citi’s Taipei-based hardware research analyst, we believe an Amazon Smartphone will be launched in 4Q12. Based on our supply chain check, we believe FIH is now jointly developing the phone with Amazon. However, we believe that Amazon will pay NRE (non-recurring engineering fees) to FIH but the device and multiple components will actually be manufactured by Hon Hai’s TMS business group (the same business group that makes Amazon’s E-reader and the 8.9” Amazon tablet).

 

Amazon CEO Bezos holds up the new Kindle Touch at news conference in New York

Amazon has launched a head-on challenge to the dominance of Apple’s iPad by unveiling a low-price tablet computer, in a move set to intensify competition over the way consumers enjoy books, music and video.

Jeff Bezos, Amazon’s founder and chief executive, launched a new series of Kindle products in New York on Wednesday, at a media gathering. He began his presentation with the launch of a new eReader -  the black-and-white Kindle Touch priced at $99, as well as a Kindle without a touch interface priced at $79. But the much-awaited direct competitor to the iPad was the $199 Kindle Fire.