Decision to release budget-priced tablet makes sense to provide competition for iPad Mini.
Google is reportedly working with Taiwan-based Quanta Computer to create a $99 Nexus tablet, with a launch due by the end of the year.
According to DigiTimes' sources, the device will feature a single-core processor, but won't have input from Asus, who collaborated with Google for its Nexus 7 tablet.
Google's Nexus 7 is currently one of the cheapest tablets available on the competitive market. An 8GB model retails for $199, with a 16GB option boasting a price tag of $249.
Those models will also be joined by the all but confirmed 32GB edition. Following a consumer mistakenly receiving a 32GB version, and Carphone Warehouse confirming its existence, UK retailer Argos showcased the new variant in its Christmas Gift Guide, with a price tag of $323 (£199).
A 32GB Nexus 7 also appeared on Staples Advantage, a retail site for business users, which showcased a price tag of $248.37.
Google considerably improving its Nexus line shouldn't come as too much of a surprise due to the fact that Apple is holding an iPad Mini media event on Tuesday, with the soon-to-be-announced tablet reportedly set to retail between $250 and $300.