Anonymous suppliers of iPad components in Asia told The Wall Street Journal that the suppliers were ordered to prepare for mass production of the device, already dubbed the "iPad mini" by technology analysts.
The rumoured iPad mini would be unveiled by October, Bloomberg News reported, adding that the gadgets were not expected to have the same super-high-resolution "retina" displays available on the new iPad.
If true, the move by Apple Inc. will be seen as a play to remain dominant over the tablet market as more electronics competitors launch their own such devices, such as Microsoft's Surface, Amazon's Kindle Fire and Google's Nexus 7.
While the Surface has a 10.6-inch (26.9 centimetres) screen, both the Kindle Fire and Nexus 7 boast a seven-inch (17.8 centimetres) display and start retailing at $209. Microsoft has not yet announced a price for the Surface.
Chinese technology news sites have reported that the smaller tablet would be priced at between $249 US and $299. The newest iPad currently on the market starts at $519.