The tablet computer will have a 10.6" touchscreen and allow users to surf the web, watch TV and read eBooks, according to industry insiders.
The device will not have a mouse or keyboard and instead resemble a large iPhone. It will help Apple take control of the wireless multimedia market.
Speculation has reached fever pitch on technology blogs that the device, dubbed the iSlate, will be unveiled at the Apple conference in San Francisco on 26th January. Apple registered the domain name iSlate.com in 2007.
Previous launches at the New Year event include the original iPhone and MacBook Air.
Rumours and counter-rumours have always surrounded fledgling Apple products. Previous reports suggested an Apple tablet would have a 7" screen and be called the iMod.
Apple filed a European design trademark for a tablet-style computer way back in 2004 and numerous tablet patents have been popping up ever since.
However, the plans were put on the back burner because the technology simply wasn't advanced enough to fulfill Steve Job's vision.
Innolux, the panel-making subsidiary of the Foxconn Group will supply the touch panels, according to DigiTimes.
A Taiwanese newspaper reported Cheng Uei Precision Industry will manufacture 'connectors' for the device.
Apple is also rumoured to be in talks with media groups such as Disney and CBS to secure regular content for the tablet.
The company revolutionised the music and mobile phone industry in the 21st century with its streamlined and intuitive gadgets including the iPod, iPhone 3GS and iPod Touch.
Shares in the company have gained almost 150 per cent thanks in large part to the popular iPhone and hugely successful App Store. They closed at a record high of $209 (£131) in Christmas week.
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