Google and Asus are reported to be teaming up to produce a co-branded 7in tablet that could launch as early as May.

Digitimes claims that the low-cost tablet - expected to retail for between $199 and $249 (£126 to £158) - will be among the first to use the Google Play store, according to its sources.

Asus was chosen as the manufacturing partner for this Google project ahead of HTC and Acer, the report states, though HTC was rejected as it was unwilling to produce a low-cost device and had insisted on leading the product's development.

Acer didn't have its own in-house research and development facilities, the report says, and Asus was chosen ahead of it because of its ODM (original design manufacturing) capacity and high product quality.

There were no indications of which territories such a device would launch in but it is expected that the co-branded tablet could pose a serious challenge to Amazon's Kindle Fire.