Amazon.com, seeking to build on its expansion into e-readers and tablets, is working on a smartphone that will go on sale in the fourth quarter of next year, according to Citigroup Inc.

The phone will be a mid-range device that uses a processor from Texas Instruments Inc. and connectivity chips from Qualcomm Inc., said Citi analyst Mark Mahaney, citing research by Asian colleagues. The total list of components won’t exceed $100, he said.

Amazon’s Kindle is the best-selling e-book reader, and its new tablet computer, the $199 Kindle Fire, is going up against Apple Inc.’s iPad this holiday season.

That has set the stage for Amazon to push into mobile phones, Mahaney said. Amazon shares fell 3.5 percent to $204.52.