According to Chinese net portal NetEase, as translated by Kotaku, the device will cost between $249 to $299 (£156 to £187).
Apple reportedly plans to release the handset later this year to “counter attack” upcoming Windows tablets.
Foxconn and Pegatron are rumored to be among the device assemblers that are set to work on the iPad mini.
The two companies are reportedly preparing 6 million units of the device for its launch.
Reports of a smaller, cheaper iPad first surfaced in 2010. The handset is said to have a 7.85-inch screen with a resolution of 1,024 by 768.
Apple has declined to comment on the rumors.