Back in July there were hushed rumors that Amazon would enter the smartphone market with a device that would compliment its existing Kindle tablet lineup. Today it appears that those rumors have been corroborated and the “Kindle Phone” may be coming as soon as next summer.

The China Economic News Service, a Taiwanese business publication issued a report stating that Foxconn, the famed manufacturer of Apple’s iPhone devices, has created a new smartphone for Amazon. The device is reportedly set to be launched between the second and third quarters of 2013. The manufacturer is “expected to ship as many as five million units” of the smartphone. The handset is also expected to be “budget-priced,” with a unit price of $100 to $200.

With the success of Amazon’s Kindle Fire tablet line-up this holiday season, the leap to a phone-sized device isn’t a large one. Based on Amazon’s tablet strategy, it’s likely that the smartphone will run a heavily-modified Android operating system similar to the Kindle Fire HD. The Kindle Fire OS focuses heavily on Amazon’s products and subscription service, Amazon Prime.

The smartphone market is already so dominated by Android and iPhone devices that platforms such as RIM and Windows Phone 8 hold only marginal shares of the market. It will be interesting to see if Amazon can put out a true competitor device that is low-priced and lures customers who are already heavily invested in Amazon’s digital media ecosystem.

(via BGR)