Rumor: Production of two-year-old iPhone 3GS to reach 2M in Dec. quarter

Taiwan-based DigiTimes cited industry sources on Friday as providing the numbers. The report also noted that production of the CDMA iPhone 4 is expected to come in at between 800,000 to one million units in the fourth quarter of 2011 and 500,000-600,000 units next quarter.

The iPhone 3GS became in October the first of Apple's handsets to be offered free with contract in the U.S., though wireless carrier partner AT&T quietly raised the price to $0.99 a month later.

Apple executives have indicated that they view the free model iPhone 3GS as a "good dynamic" for the iPhone family because it introduces the company's products "to a wider audience of customers."

Even after two years on the market, the iPhone 3GS remained the second-best-selling smartphone in the U.S. last quarter behind only its successor, the iPhone 4, according to data from the NPD Group. Retail checks have also suggested continued strong demand for the iPhone 3GS.

The rumored two million iPhone 3GS units will play a small part in helping Apple reach its projection of an all-time sales record for iPhone units this quarter. The company's results for the September quarter disappointed some analysts largely because the number of iPhone buyers holding out for the iPhone 4S proved bigger than expected.

The Cupertino, Calif., company believes pent up demand for the iPhone 4S, coupled with continued sales of the iPhone 4 and iPhone 3GS, will drive record revenues of $37 billion in the December quarter. Multiple analysts expect Apple to sell between 28 to 30 million iPhone units during the period, though one analysis based on U.S. carrier estimates suggests the company could ship as many as 42 million handsets.