Google and Asus are said to be “making headway” on a cheaper Nexus 7 that’s expected to launch as early as the first quarter of 2013. O-Film Tech, a touchscreen maker based in China, has reportedly been tasked with producing its display, which is to utilize “glass-film-film” (GFF) technology that will help cut production costs.

O-Film began shipping the displays this month, according to a DigiTimes report citing “industry sources.” In addition to making the tablet cheaper, GFF technology will also help to make it thinner and lighter, and could lead to a $99 price tag for the new slate.

However, it’s unlikely it would be quite that cheap at launch due to “limits as to how far the companies can drive down costs in their supply chain,” the report notes. Instead, it’s expected to sell for between $129 and $149 initially, and could be aimed at emerging markets. Google is preparing between 500,000 and 600,000 units for release, the sources claim.

While it’s possible the device could appear during early 2013, sources warn that Google may skip this quiet period and choose to launch it during the second quarter instead.

As this is a DigiTimes rumor, we’d advise you to take it with a pinch of salt. There’s been a lot of speculation surrounding a cheaper Nexus 7, but right now, that’s all it is.

• SourceDigiTimes