According to DigiTimes, a daily newspaper for semiconductor, electronics, computer and communications industries in Taiwan and Greater China, Apple is planning a five to seven inch version of the iPad.
DigiTimes Research senior analyst Mingchi Kuo, citing talks with upstream component sources, claims Apple are planning a device under $400 (£262).
Currently the cheapest iPad, the 16GB Wi-Fi model, costs $499 (£327).
The smaller more portable iPad would be aimed at those wanting to read rather than write and input text.
Apple sold 300,000 iPads last Saturday, 3 April when the device went on sale in the US.
Brits are expected to be able to get their hands on the device later this month.