Apple is set to introduce the iPad 3 in two days, but the rumour mill is also in overdrive with talk of a smaller model, slated for Q3.

The iPad mini should feature a 7.85-inch screen and it is supposed to take on the Kindle Fire and other small and cheap Android tabs. According to the latest reports, AU Optronics and LG Display have been tapped to supply the diminutive screen, while Radiant Opto-Electronics and Forhouse should supply the backlight module. Toshiba will bring some of its NAND to the party, while Renesas will supply some integrated circuits.

It is still too early to talk about specs, but punters believe the new iPad mini will end up with a revamped iPad 2 platform, most likely with the same 1024x768 resolution, making it the only 4:3 7-inch tablet, or 7.85-inch to be precise. However, Apple is also expected to introduce a stripped down version of the iPad 2, with just 8GB of storage, and the company has already slashed iPad prices by $50 in the US.

This indicates that Apple will try to offer a much wider range of iPad products by the end of the year, starting with the mini, with a rumored price tag of $250 to $300, followed by a stripped down iPad 2, which will probably continue shipping for a few months, only to be replaced by the mini once it shows up.

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