According to Economic Daily News out of Taiwan, Apple has purportedly paired up with LG Display and AU Optronics for a new 7.85-inch iPad to be released in early 2012. The smaller iPad would supposedly carry the same 1024x768 resolution of the current iPad 2, making a higher DPI level and helping Apple compete with the recently-announced 7-inch Kindle Fire.

This isn't the first we've heard of a smaller iPad from Economic Daily News, as around the same time last year there were rumors of Apple prepping a 7-inch iPad for a Christmas 2010 release that never saw the light of day.

As with all iPad speculation, take this with a 7.8-inch grain of salt. Steve Jobs famously hated on the idea due to the lack of screen size limiting the quality of the apps.

Anyone else get the feeling the crazy rumor people won't be happy until they've spread word of Apple making an imagined tablet in every size Samsung makes a real one?

Source: Economic Daily News via UnwiredView