Is the tech giant developing a 7.85-inch iPad to compete with Amazon's Kindle Fire tablet?

DigiTimes, the Taiwanese technology-news outlet, reported Friday that Apple is planning to release two tablet models in 2012.

The first model expected is the iPad 3 set for release at the end of the first quarter, according to sources in the supply chain DigiTimes cited.

Apple is also set to release a "mini" version of the popular iPad with a smaller screen in the fourth quarter to compete with the Kindle Fire.

From DigiTimes: