Microsoft has reportedly signed a deal with iPhone manufacturer Foxconn to begin production of its own smartphone device.
First reported by rumour site Digitimes, the firm is extending the Surface brand into the smartphone market as a potential competitor for Apple's iPhone, which currently dominates the market.
It would signify Microsoft's further efforts to combat Apple and its dominance of the mobile device market, by producing a range of Surface branded products to compete with both the iPhone and iPad devices.
The report should be taken with a pinch of salt, however, as Digitimes has a mixed history on reporting such rumours.
Whilst predicting that consumers would be using Nokia tablets and iPhone 5 foldout keyboards by Christmas, the site did correctly predict the release of the iPad mini and upgraded screen size of the iPhone 5 ahead of its launch.
If true, the news would have massive implications for those firms partnered with Microsoft, particularly Nokia, who recently launched the Lumina range, which is based around the Windows Phone operating system.
It's hard to believe that Microsoft would overshadow the release of Nokia's Windows Phone with its own branded device so soon after its launch,
However, it wouldn't be the first time Microsoft did something similar, considering it launched the original Surface tablet as a direct competitor against its partnership with Acer and its own range of Windows 8 RT based tablets.
Want to receive up-to-the-minute tech news straight to your inbox? Then click here to sign up for the completely free PCR Daily Digest and Newsflash email services. You can also follow PCR on Twitter and Facebook.