Baidu and Foxconn are reportedly embarking in cosy discussions about building a low priced smartphone, which will run the Chinese web company's mobile operating system.
According to the rumour mill, the phone will cost around $159 (1,000 RMB) and include
a 3.5-inch touchscreen, 1400mAH battery and high-resolution camera.
As well as running Baidu's "Yi" OS, there will also be software such as Baidu's cloud storage service, Baidu Music and Baidu Maps.
This isn't the first mobile phone move by Baidu. Late last year the Chinese giant went into partnership with Dell. However, their mobile offspring - the Dell Streak Pro D43 - is said to be targeted at business users and has higher specs and a $474 (2,999 RMB) smartphone price tag than the rumoured Foxconn phone.
In previous reports, Baidu CEO Robin Li said the company had earmarked mobile as an important growth channel.
And Foxconn is of course no stranger to the handset market having produced the Android-powered Journey A890 budget handset for the Indonesian manufacturer Nexian as well as making gadgets for Apple, HP and Best Buy.
Baidu is expected to report its first quarter results next Tuesday and according to Forbes the outlook is positive. It is predicted that the company will announce a profit of around 84 cents a share, which Forbes says is a rise from 47 cents per share last year.
The company's revenue is thought to rise by 82.1 percent to $677.5 million for the quarter from last year's $372 million. For the year, analysts forecast a revenue of $3.57 billion.