Reports about a less expensive 4-inch iPhone aren't going away. Ming-Chi Kuo, a respected analyst with KGI Securities, has published a report that says he expects the device to arrive early next year. The small iPhone "resembles an upgraded iPhone 5S," according to the report.
This phone will come with the same A9 chip that's used in the iPhone 6S, but it will not come with 3D Touch. Kuo believes it is more likely the device will be metal like the iPhone 5S rather than plastic like the iPhone 5C.
Kuo has a strong trackrecord and even beyond his report, we've heard about a possible 4-inch iPhone for months.