According to the Wall Street Journal, the tech firm plans to reduce the cost of the phone by making the shell out of polycarbonate plastic as opposed to the aluminium casing of the iPhone 5, and it could be on the market as early as this year.
Apple has rarely delved into the cheaper end of the market, historically preferring to produce high-end products.
But sources claim it now hopes to grab market share by launching a more affordable smartphone aimed at enticing new customers who have yet to buy into the brand.
Insiders told the Wall Street Journal that a less pricey version of the iPhone has been in development since 2009 but was shelved amid concerns over complicating manufacturing processes.
However, since most of the parts would either remain the same or be recycled from older models, the affordable iPhone could yet see the light of day.
Apple's global smartphone shipments fell from 23 per cent in 2011 to 14.6 per cent in the third quarter of 2012, while Samsung's share of the market leapt from 8.8 per cent to 31.3 per cent over the course of the year.
The Wall Street Journal reports that plans for the affordable iPhone could still be scrapped though, as executives fear a cheaper product could put investors off.
What do you think? Will a cheaper iPhone help Apple to gain market share, or will it damage the brand? Leave your comments below...