According to Digitimes, Apple will increase iPhone 5 display to be 4-inch, the existing iPhone 4 has a 3.5-inch, Apple will make this screen expanding in order to better compete with the Google Android platform in the 4 to 7-inch smartphone market.

From component suppliers:
The component suppliers noted that the production lines for Apple's next generation iPhone have begun testing, and Apple is interesting in expanding the screen size to 4-inches to support the tablet PC market as the vendor only has a 9.7-inch iPad in the market.

Digitimes also noting that iPhone 5 will sport A5 processor which will directly compete with recently launched Android handsets sporting Tegra 2 dual-core processors.

Apple is reportedly looking to outsource the production of its A4 processor as well as the next-generation ARM Cortex-A9-based A5 processor to Taiwan Semiconductor Manufacturing Company (TSMC), according to industry sources.

According to Digitimes Research, the iPad 2 will support an enhanced version of the A4 and the A5 will power the iPhone 5. TSMC will initially produce the improved A4, and could likely become the exclusive manufacturer of the A5.

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