A new report has come out suggesting that Apple will use a Snapdragon SoC to reduce costs for a new iPhone. Apple Insider has pointed to two 28nm-based classes of Snapdragon that includes WiFi, Bluetooth and a cellular modem. This would reduce the cost of the handset, and it reduces the amount of materials used in creating the device.

The chipset would likely be a dual-core MSM8960 or a quad-core APQ8064, depending on how much each chipset would cost. Apple does have the advantage of bulk – if they release a cheap iPhone, it’s very likely that the device will sell well, and they can afford to order in quantities of several million.

Demand for a cheaper iPhone is growing, especially in developing markets such as China and India where carriers are reluctant to subsidize phones and wages are too low to justify the high cost of the current range of iPhones. A cheaper model would allow them to compete with mid-range Android handsets, such as the Galaxy S II and other devices that are very popular in emerging markets. Apple has peaked in the U.S. and Europe, the markets where they are most likely to succeed in – now they need cheaper products.