Chinese net portal NetEase has published an article that claims Apple is currently working on a smaller iPad, which will be released sometime in Q3 of this year.
According to NetEase, the device will be released to "counter attack" the range of upcoming Windows 8-powered tablets. Apple's iPad mini will purportedly cost anywhere between $249 and £299.
The article claims that the two companies charged with constructing the device are Honhai Precision (Foxconn) and Pegatron - the latter of which was - at one point - a subsidiary of Asustek. Asustek is currently working with Google to produce Android tablets.
Naturally, we always take rumours of a smaller iPad with a generous pinch of salt. Former Apple CEO Steve Jobs famously claimed that the iPad's 9.7-inch display was the smallest-sized screen a decent tablet should house.