Online retailer Amazon has reportedly acquired US technology firm Touchco.

The New York-based start-up company, a spin out from New York University, specialises in touch-screen technology.

Industry commentators believe combining Touchco’s multi-touch technology with Amazon’s popular Kindle e-reader would create a device which could directly compete with Apple’s new iPad.

A report by the New York Times quoted a source familiar with the deal, who said Amazon will merge Touchco’s technology and staff into its Kindle hardware division, based in Cupertino, California.

The paper said Touchco’s technology works well with LED screens such as those used by the iPad. It uses resistors which are sensitive to varying levels of pressure and can distinguish between a finger and the tip of a pen for example.

Both Amazon and Touchco have declined to comment. The terms of the deal have not been disclosed.