Apple has reportedly received screens measuring 7.85 inches and offering the same 1024x768 resolution of the iPad 2, raising suggestions that an 'iPad Mini' might be announced early next year.
The report comes from Taiwan's United Daily News and claims that AU Optronics and LG Display have sent samples of the smaller screens to Apple for testing.
Rumours of an iPad mini are not new, and with the recently announced Amazon Kindle Fire - with its 7 inch display - to go on sale next month, a smaller, cheaper iPad could make economic sense.
However, as MacRumors points out, if the screen is smaller than the current iPad 2, but retains the same resolution then the user interface will be smaller, possibly presenting navigational problems due to the much smaller icons.
On the other hand, keeping the same resolution would mean that all applications for the iPad 2 could be ported onto the smaller device, giving the iPad mini a huge catalogue of apps from launch.
Analyst Brian White, from Ticonderoga Securities, suggests that a 'mini' iPad might be in the works, but the name may refer to a cheaper, less well-equipped iPad rather than a smaller one.
"Regarding Apple, our research is pointing to the unveiling of a lower priced iPad in the first few months of 2012 that is aimed at expanding the company's market potential by tapping into a more price sensitive consumer segment.
"Essentially, this "iPad mini" will also fend off the recently announced Amazon Kindle Fire that addresses the low-end tablet market with a $199 price tag but could lead to bigger tablet ambitions from the online retailer in the future. The "mini" refers to a reduced price point of this iPad and not necessarily the size of the device. We believe this lower priced iPad could be priced in the mid-to-high-$200 range."
The iPad 3 is expected to be announced in the coming months, a device which is predicted to have a Retina display with a resolution of 2048x1536 pixels.