A Chinese newspaper is reporting that Apple has placed an order with a Taiwanese manufacturer for 12 million iPhone handsets ready for release next year.

The Commercial Times claimed that Foxconn Electronics will make the device, and speculation is mounting that the phone will be launched at next year's Macworld conference in San Francisco.

Foxconn already produces Apple components and has won the contract to produce the latest MacBook, according to the report.

The manufacturer has refused to confirm or deny the report, and calls to Apple were unanswered at the time of publication.

Rumours of an iPhone have been circulating for over a year, but speculation of a launch was heightened when an Apple executive mentioned the project in July.

The company officially filed trademark rights on the term 'iPhone' in mid-October.

Apple co-developed the Rokr music phone with Motorola but the handset was unpopular, due in part to the fact that it was limited to holding only 100 songs.