Apple's new 4-inch iPhone to enter mass production soon, estimated to ship 12M units in 2016

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A new report from KGI analyst Ming-Chi Kuo says Apple's widely rumored next-generation 4-inch iPhone is about to enter mass production and is estimated to 12 million units in 2016.

In a note to investors obtained by AppleInsider, Kuo fails to offer a specific timeline on production, but reiterates his previous hardware predictions of an iPhone 5s-esque design, internals similar to an iPhone 6s and a price of $400 to $500.

The most obvious aesthetic difference between the generations-old iPhone 5s and upcoming 4-inch handset will be a so-called "2.5D" cover glass, a reference to the slightly curved display introduced with iPhone 6. Kuo believes Apple will load the unnamed iPhone with an A9 processor, 12-megapixel rear-facing camera and NFC support for touchless Apple Pay transactions.

KGI is forecasting shipments of 12 million units, down from a previous 18 to 20 million units, citing a probable iPhone 5s price cut. Driven by a low 2015 base and an aggressive pricing model, total 4-inch iPhone shipments will grow 131 percent year-over-year to 37 million units, Kuo says.

Looking ahead, the aggressive play at low- to mid-tier markets will pull down overall iPhone ASP, which Apple is likely to counter by targeting a wider array of market segments. For example, differentiation in the high-end is anticipated to result in two distinct "iPhone 7 Plus" models, one with a dual-camera iSight setup and another sporting a single-camera configuration.

Apple is expected to hold a special media event next month to introduce the new 4-inch handset, a revamped 9.7-inch iPad model and Apple Watch accessories. The most recent rumors peg a keynote presentation on March 22, with products launching shortly thereafter.