While rumours have been circulating for months about Apple releasing a smaller version of the iPad, rival tablet maker Amazon might be looking to do just the opposite, according to a new report.

DigiTimes reported that "market rumours" indicate that Amazon is planning to launch a 10.1in Kindle Fire in the third quarter of the year. The Kindle Fire currently has a 7in screen.

Amazon is reportedly looking so simplify its product line-up and launch the 10.1in Kindle Fire tablet to compete with Apple's iPad, which has a 9.7in screen. Amazon is also apparently putting on hold, for the moment, plans to launch a speculated 8.9in model, which it was reportedly developing to take on Samsung's Galaxy Tab tablets.

Amazon tablet orders are expected to ramp up at the end of this quarter or in early third quarter, DigiTimes' sources said. Amazon is expected to ship 30 to 40 million tablets this year.

Meanwhile, rumours have been flying for months that Apple is working on an iPad with a smaller screen, which would compete with Amazon's affordably priced tablet.

The rumours first cropped up back in December, when Apple reportedly purchased 7.85in panels from LG Display and AU Optronics. Last week, the website iMore claimed to have a "reliable" source who said Apple is planning to release a smaller version of its coveted tablet in October for $200 (£125) to $250 (£160). The Cupertino tech giant is looking to price its so-called iPad mini aggressively to "leave absolutely no space for competitors", the site reported.

As for the likelihood of this coming to pass, Time columnist Harry McCracken recently fact-checked 25 of Digitimes' tech stories. "By my count, 16 of these 25 stories turned out to be mostly or completely off-base. Five are largely or entirely correct. And four involve predictions that might yet come true", McCracken said.

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