The new handset – sometimes referred to as the iPhone SE 2, or iPhone 9 – will go into production in February ahead of a potential launch in March, according to a new Bloomberg report.
That is in line with the launch of the original iPhone SE. That was released in March 2016 and was a breakout success, but Apple hasn't updated it or offered a cheaper or smaller phone since.
The new handset is set to be the successor to that phone. Just like that model, it will pack newer technology into the body of 2017's iPhone 8.
Though it will include some hardware features that have now been largely dropped across Apple's line-up – including the bezel around the display, and the home button at the bottom – it will have the processing power of the iPhone 11, with the same A13 chip, numerous rumours have suggested.
Apple still sells the iPhone 8, at the bottom end of its price range. But the new phone will presumably replace that model in its line-up.
The launch comes ahead of a more major revision of Apple's iPhone line-up in September. At that annual event, it is rumoured to be launching four entirely new iPhones, at least some of which are expected to bring support for 5G and other newer technologies.
Reliable Apple analyst Ming-chi Kuo have suggested the phone will be focused on owners of the older iPhone 6 and 6 Plus, which stopped receiving iOS updates this year.