In a fresh research report, KGI Securities analyst Ming-Chi Kuo has reportedly shared key details of Apple's (AAPL -1.10%) upcoming 4-inch iPhone, which is expected to launch in "early 2016."

Per the analyst, the device will feature the same A9 applications processor found in the recently released iPhone 6s and 6s Plus devices (rather than the A8 as some rumors have indicated). It will also pack an NFC chip, which should allow users of the smaller iPhones to take advantage of Apple Pay, which first debuted with the iPhone 6/6 Plus.

Additionally, Kuo says that the new phone will feature a 2.5D cover glass that curves at the edges (similar to that on the iPhone 6/6s family of phones) rather than the completely planar cover glass as found on the iPhone 5s.

Finally, as far as the cameras are concerned, the new iPhones will reportedly retain the same 8 megapixel and 1.2 megapixel rear and front shooters, respectively (although since the A9 has a much improved image signal processor from the one in the A7, camera features/image quality could still improve).

This sounds like a really compelling device
From reading some of the Apple-centric web forums from time to time, it's quite clear that there's demand for a 4-inch iPhone with relatively high-end hardware. Although this new iPhone will clearly lag the iPhone 6s/6s Plus in a number of areas (cameras, lack of 3D Touch, etc.), it will feature an A9 chip, which should keep the device fresh and quite snappy for years to come.

For users who held on to the iPhone 5/5c (and older iPhones) hoping for a substantially improved 4-inch device to arrive and make an upgrade worthwhile, this seems like the perfect device.

Additionally, Kuo says that this new iPhone will be priced between $400 and $500 "with the aim of penetrating emerging markets and consumers on smaller budgets." It's not hard to believe that a well-designed, fast, and lower-cost 4-inch device will help boost Apple's share among such buyers.

Impact on iPhone sales? Supply chain?
Kuo says that "recently slowed iPhone 6s orders" validates his team's prediction that the iPhone 6s might not do better in the marketplace than the iPhone 6 did. Additionally, although Kuo believes that the "new 4-inch iPhone may not catalyze [iPhone] shipments," it should serve to "mitigate slow seasonality for suppliers and a negative impact on share price."

He also argues that the new device should also "raise investor awareness of the Apple supply chain."

A few guesses for the rest of the specs
Although Kuo has revealed some of the "big ticket" specifications of this new iPhone, we still don't know what kind of connectivity and cellular capability the device will have.

The iPhone 5s featured a category 3 LTE modem (100 megabit per second download/50 megabit per second upload) and 802.11 a/b/g/n Wi-Fi connectivity. In these departments, the iPhone 5s is quite behind the times and in need of an upgrade.

I suspect that in terms of wireless, Apple will use components similar to those found in the iPhone 6/6 Plus in order to keep costs in check while at the same time delivering generational boosts in both Wi-Fi and cellular connectivity. This means single-stream 802.11ac Wi-Fi (delivering a solid jump in bandwidth from the 5s) as well as a category 4 LTE modem (50% faster peak download speeds compared to the modem found in the iPhone 5s).

Finally, as far as the display is concerned, since this new iPhone will launch while the iPhone 6s/6s Plus are on the market, I don't think users should expect to see an increase in display resolution (doing so would make the display sharper than the one found on the iPhone 6s).

I suspect Apple will recycle the same display from the iPhone 5/5c/5s as it's still reasonably sharp, high quality, and probably pretty cheap to produce at this point.