Sharp has reduced production of Apple's 9.7in iPad displays to a 'minimal level' in Japan, a new report suggests, claiming that the rise in demand for the iPad mini could be contributing to a decrease in full-size iPad sales, and that Apple could be preparing to launch its iPad 5.

Reuters cites sources with knowledge of Sharp's production plans who claim that Sharp has nearly halted its iPad screen production line at its Kameyama plant in Japan this month, following a “gradual slowdown” that began at the end of last year. According to the sources, the level of remaining screen output at Sharp is “extremely limited”.

Sharp and Apple have refused to comment, but Reuters suggests that Apple's iPad screen production cuts could be in preparation for a switch to another supplier, or as a result of the increase in demand for the iPad mini, which hit the shelves in November last year.

Sterne Agee analyst Shaw Wu said: “The March quarter is almost always weaker than the December quarter,” so this could be the reason for Apple's alleged cuts.

Alternatively, the iPad could be nearing an update, with Apple rumoured to be working on a lighter, thinner iPad 5 which could look like this. A new iPad is likely to require a new display, so Apple could be stopping production of the current iPad's screen in order to begin manufacturing the new one.

The next iPad could have a 'Retina +' display, and could use the new, tougher Gorilla Glass 3 to help reduce the risk of scratches.

Some analysts have predicted that the next iPad could arrive in March, which would be a year after the launch of the iPad 3. Apple introduced its fourth-generation iPad with a minor spec boost and new Lightning connector in November, just seven months after its predecessor.

Others suggest that a June launch for the iPad 5 could me more likely, and that Apple will unveil a new Retina display iPad mini alongside the full-size update.

Reuters reports that Macquarie Research predicts a 40 per cent decline in full-size iPad shipments in the current quarter, but that Apple's total tablet shipments will not see such a big fall due to strong sales of the iPad mini.

BNP Paribas expects that the iPad mini will account for 60 per cent of Apple's total iPad shipments in the Janurary-March quarter.

Last week, similar reports suggested that Apple had cut orders for its iPhone 5, leading Apple's shares to plummet to less than $500, but those reports were later accused of being 'flawed' and involved in stock manipulation. One analyst suggested that the cause of the cuts is Apple's preparation for an 'evolutionary technology leap' for the upcoming iPhone 6.

SEE: Did stock manipulation cause Apple stock to close at $500?