The article, originally posted on Digitimes, reports that Apple will make certain concessions in quality with the new lower cost phone including a plastic case to keep costs down along with a 4" display and an A6 processor. The 4" display is the same size as in the current iPhone 5, and would most likely sport a retina display. The new phone is said to target emerging markets, where top line iPhones can fetch more than $1,000 USD. The goal of Apple would be to attract new customers into their ecosystem in more price sensitive markets.
A few weeks ago Cult of Mac reported on a leaked image of a plastic iPhone case. Combining these reports it appears the release of a lost cost iPhone is imminent. Apple is also reported to be continuing their manufacturing relationship with Foxconn and Pegatron with this potential product release.