Bloomberg reports, "Foxconn, the Chinese mobile- phone maker, is working with Amazon on the device, said one of the people, who asked not to be identified because the plans are private. Amazon is seeking to complement the smartphone strategy by acquiring patents that cover wireless technology and would help it defend against allegations of infringement, other people with knowledge of the matter said."

After the success of e-readers, this would be Amazon's latest foray in the hardware sector to rival Apple and Google. The report comes close on the heel of rumours that Amazon is planning to launch Kindle Fire 2 to compete with Google Nexus 7.