iPad Mini Mass-Production in Sept: Q3/4 2012 Release Date [REPORT]

Rumors surrounding a potential iPad mini have been fueled anew after members of Apple's supply chain in Asia told the Wall Street Journal that mass production for the tablet would begin in September.

Two of the insiders told the Journal the smaller version of the iPad would come with a screen smaller than 8 inches, which fits with popular rumors that predict a 7.85-inch screen.

Following the recent launch of the Google Nexus 7 mini tablet, analyst Andy Hargreaves anticipates Apple will debut its 8GB rival in the fourth quarter of 2012, perhaps alongside the highly anticipated iPhone 5.

The device will come with updated screen technology, a new camera position and an improved battery to reduce weight, according to Hargreaves' report. He predicts it will also come with a $299 price tag.

We expect Apple to stop producing the 8GB iPad 2 in front of the holidays. Apple may fill the $399 price point with a 16GB iPad mini or a 8GB new iPad. A 16GB iPad mini seems more appropriate, in our view, and would likely create more gross profit per unit, Pacific Crest's prediction reads.

Rumors about a potential mini iPad have been in the works since Q1 2012, when Apple was believed to be testing smaller screen. Steve Jobs was never a fan of the idea, but Apple enthusiasts and experts have said a smaller device is key for Apple to stay competitive and rival smaller and cheaper tablets like the Kindle Fire.

Hargreaves expects Apple to sell 35 million iPad mini units in 2013, causing 25 percent cannibalization of the larger 9.5-inch iPad. Less cannibalization or a higher [average selling price], potentially through a 16GB model priced at $399, could drive upside to our estimates, Hargreaves adds in his report.

Meanwhile, Google unveiled its own Android tablet, the Nexus 7, in collaboration with Asus, at its annual developer conference last Wednesday.

The 7-inch Android 4.1 Jelly Bean Nexus tablet is as light as a paperback book at just 340 grams and is extremely portable. Yet, its small frame is packed with a host of features.

By tapping into Google's Play store, the tablet becomes the ideal device for gaming, movies, apps, e-book and magazines. As expected, the Nexus 7 comes with a 1280 x 800 display and a Tegra 3 chipset. Its quadcore CPU, 12-core GPU makes navigation and gaming extremely smooth.

In addition to its front-facing camera, Wi-Fi, Bluetooth, GPS, gyroscope and accelerometer, it also has up to nine hours of video playback. Early on Wednesday, an Asustek executive told Reuters the Nexus 7 would be a rival to Amazon's Kindle Fire.

It's targeting Amazon. The Kindle is based on Google's platform but with its own service, so Google has to launch its own service, too, he told Reuters. Should Apple unveil a mini iPad in Q4, Google's competition could heat up considerably.