The rumored fourth-generation iPhone (now being tagged the “iPhone HD”) will apparently use Apple’s own custom processor according to the Korea Times, which has quotes anonymous executives close to the story.

Where the iPhone 3GS and earlier models were using primarily Samsung-designed chips with an Apple influence, the next iPhone will supposedly use a primarily Apple-created chip. Features weren’t discussed with the contact, but a variant of the iPad’s A4 processor is the most probable candidate.

A move of the sort was already expected but may be important for Apple, which may be pushing for an HD focus with its new smartphone. The A4 is already capable of 720p video playback and could see that feature, as well as better battery life become present in the iPhone version. It’s uncertain if Apple will have to underclock the A4 or otherwise make significant changes to accommodate the tighter spaces and power requirements of a handset.

The A4 is known to be a modified, system-on-a-chip design based on ARM’s Cortex-A8, much like the processor found in the iPhone 3GS but with a newer PowerVR SGX535 graphics core, a higher clock speed and other optimizations.

Stay tuned for additional details as they become available.