Apple is likely to launch a 7.85-inch iPad prior to the fourth quarter of 2012 in addition to a new iPad scheduled to be released at the end of the first quarter, according to sources in the supply chain.

Global shipments of tablet PCs are expected to reach 60 million units in 2011, of which 70% will be Apple's iPads. To cash in on market demand as well as market expectations, Apple is expected to release its next-generation iPads at the end first-quarter 2012, said the sources.

However, in order to cope with increasing market competition including the 7-inch Kindle Fire from Amazon and the launch of large-size smartphones from handset vendors, Apple has been persuaded into the development of 7.85-inch iPads, the sources indicated.

In addition to purchasing 7.85-inch panels from LG Display, Apple will also buy panels from AU Optronics (AUO), indicated the sources, adding that makers in the supply chain are likely to begin production of the 7.85-inch models at the end of the second quarter of 2012.