Citi Analysts Believe Amazon Will Release Smartphone For 2012 Holidays

Is Amazon (NSDQ: AMZN) planning to release a Kindle smartphone by Christmas next year? Citigroup analysts Mark Mahaney and Kevin Chang say yes, based on their “supply chain channel checks in Asia.”

Citi expects a mid-range smartphone that costs Amazon around $150 to $170 to manufacture, but think Amazon will sell the phone at cost or below, as they are reportedly doing with the Kindle Fire and Kindle 4.

The analysts believe Foxconn International Holdings is currently developing the phone with Amazon, but that the device itself will be manufactured by Hon Hai’s TMS business group, which makes Kindle e-readers and Amazon’s rumored 9-inch tablet.

Mahaney is Citi’s internet research analyst and correctly predicted in May that Amazon would release a sub-$100 Kindle e-reader by the end of 2011. “With the clear success of the Kindle e-Reader over the past 3 years, and Kindle Fire possibly succeeding in the low-priced Tablet market, we view [a smartphone] as the next logical step for Amazon,” he writes.