Apple is set to reintroduce a smaller 4-inch iPhone to its smartphone range in early 2016, according to one well-respected analyst with a strong track record of predicting Apple's upcoming plans.

In an investment note to customers, KGI's Ming-Chi Kuo said that Apple is planning to launch the smaller smartphone in the early part of  2016 while its annual refresh cycle for its flagship smartphone will continue as normal, seeing the iPhone 7 and iPhone 7 Plus introduced to the market in the third quarter of 2016.

As reported by 9to5Mac, Kuo, who has deep links within the Chinese supply chain used by Apple, believes the new smartphone will have a metallic casing with a design that “resembles an upgraded iPhone 5S” rather than the plastic chassis seen on the iPhone 5C. He adds that to differentiate the offering further, it won't feature the new 3D Touch technology seen on Apple's latest iPhones.

According to MacRumors, Kuo's note says:

As there is still demand for a 4-inch iPhone, we believe Apple will upgrade this product line. Because the iPhone 5s is more popular than the iPhone 5c, we think Apple is likely to launch an upgraded iPhone 5s. We predict Apple will mass-produce this new 4-inch iPhone in 1H16 with metal casings. In order to make the current iOS 9 or next-generation iOS 10 run smoothly, Apple may adopt an A9 chip for this new phone.

Apple's last 4-inch iPhone was the iPhone 5C, which was discontinued just two months ago with the launch of Apple's latest iPhones. There had been rumors in the lead up to Apple's September event that the company would produce a smaller iPhone 6C, but the new device was not ready to show off at the time.

Apple has just reported another quarter of record iPhone sales, with the launch of the iPhone 6S and iPhone 6S Plus pushing sales to over 48 million with strong demand in China, the major force behind the 22 percent increase year-on-year. Despite another record quarter, some analysts continue to predict the iPhone has reached its peak, but the launch of a new -- and presumably more affordable -- model could help offset any decline due to market saturation.

Kuo predicts Apple could ship between 20-30 million units of the new phone in 2016. One of the key smartphone markets in the coming years for companies like Apple will be India, where smartphone penetration in the country still below 20 percent and with a population of 1.2 billion people, there is a lot of scope for growth for a manufacturer that can offer the right combination of features, prestige and price.

Apple will once again update its flagship smartphones in 2016 with Kuo predicting that Apple will continue with the fall launch window for the iPhone 7 and iPhone 7 Plus which will retain the 4.7-inch and 5.5-inch screen sizes. Kuo says both phones will be powered by a new A10 chip while the larger device will come with 3GB of RAM compared to the 2GB of RAM on the smaller iPhone 7.

Apple is rumored to be working on a design reboot of the new phones with some reports speculating that the company will be using a new material for its casing, moving away from aluminum. There are also reports that the new iPhones will be waterproof and dustproof, but Kuo makes no mention of these aspects in his note.