On Friday we reported on a rumor that Apple might be upgrading the display technology in the iPhone 5 (or iPhone 6, or “new iPhone,” or whatever they end up calling it). The new iPhone, the rumor went, would be getting in-cell touchscreen technolgoy that would enable Apple to make the next iPhone thinner and lighter than the iPhone 4S (which is already thicker than many Android-based smartphones.

That rumor, which originated with Piper Jaffray analyst Gene Munster, appears to have some confirmation this morning. According to AppleInsider, KGI Securities analyst Ming-Chi Kuo (who has a fairly reliable record in Apple matters) posted a report yesterday confirming that the new iPhone would be getting in-cell touchscreen technology, and going into a little more detail about what that would mean in terms of the device’s thickness. The current iPhone’s screen consists of three layers – glass, a touch sensor, and the LCD display. The use of in-cell technology would merge the touch sensor and LCD into a single layer, saving roughly half a millimeter in thickness.

That’s not all, though. Kuo also predicted that Apple will shave off another half millimeter of thickness by making the battery wider (and therefor thinner). Furthermore, he suggested that the glass rear panel on the iPhone 4S will be replaced with metal – possibly liquidmetal? – saving another half millimeter.

All told, if Kuo is correct Apple will be reducing the next iPhone’s thickness by about 1.5 millimeters. While that doesn’t sound like much, it becomes a bit more significant when you realize that the iPhone 4S is only 9.3 millimeters thick.

There are several reasons for Apple to make a move like this. For one thing, Apple has shown a strong preference for making successive generations of iOS devices thinner and lighter. Though the addition of 4G LTE made that impossible with the new iPad, the switch to in-cell touchscreens could be enough to allow it in the new iPhone. For another, the iPhone’s competitors have all shown the same tendency. Android phones are routinely getting thinner and thinner. With the bulk of the competition now down into the 7-8 millimeter range, the iPhone is one of the thicker smartphones on the market.

Even more importantly, according to Kuo, the use of in-cell touchscreen tech would allow Apple to streamline the iPhone production process. The number of items required at the time the display components are bonded together would drop from six to three, and the steps in display production would drop from eight to five. All told, Kuo said, the switch to in-cell technology has the potential to reduce the production costs for the new iPhone by as much as 20%. Whether those savings in production cost will be passed on to the consumer (as a reduced sticker price) or the carriers (as reduced subsidies) is uncertain.

Kuo also confirmed the general consensus that the next iPhone will be following the iPhone 4S’s lead coming in the third quarter, rather than in the summer as with previous iPhones.