Lei Jun, founder and CEO of China's mobile company Xiaomi, speaks at a launch ceremony of Xiaomi Phone 4, in Beijing, July 22, 2014.
Lei Jun, founder and CEO of China's mobile company Xiaomi, speaks at a launch ceremony of Xiaomi Phone 4, in Beijing, July 22, 2014. Reuters/Jason Lee

An unknown 4.3-inch Xiaomi handset has been spotted in China, triggering fresh speculations that like Samsung, Xiaomi may be gearing up to challenge Apple’s new 4-inch iPhone SE.

According to GizChina (via Weibo), in response to Apple’s new powerful 4-inch iPhone, Xiaomi may come up with a Snapdragon powered 4.3-inch handset. The device is expected to tout a 1.8Ghz Snapdragon 820 processor.

The report also mentions that the mysterious Xiaomi phone will boast a 720p HD display, 3GB of RAM and 32GB of internal memory. The rumoured Xiaomi phone may also sport 2,350mAh battery with fast charging technology.

The smartphone is expected to feature a 13-megapixel rear-facing camera unit, but no optical image stabilisation. The unknown 4.3-inch Xiaomi smartphone may also come with fingerprint reader, according to unconfirmed reports.

Xiaomi will reportedly launch the new 4.3-inch smartphone in June for 1799 Yuan (US$276 or AU$366). However, the device will most likely only be released in China, posing a threat to Apple’s iPhone SE sales in the country.

The price of an Apple iPhone SE starts at US$399 (AU$526), with the device powered by an Apple A9 chip, an M9 motion co-processor, and 12MP iSight camera with support for Live Photos. Apple's new iPhone SE comes is available in Space Gray, Silver, Gold and Rose Gold.

Related: Apple iPhone SE specs: 5 best features of the new 4-inch iPhone

Meanwhile, Xiaomi’s Mi2, launched in August 2012, features a 4.3-inch LCD display with a resolution of 720 x 1280 pixels .

Prevailing rumours also indicate that Samsung is preparing to launch a Galaxy S7 Mini to take on the recently released budget-friendly iPhone SE. The smartphone is said to come packed with a 4.6-inch display supported by an HD resolution of 720 x 1280 pixels.

According to SamMobile, the Galaxy S7 Mini will be powered by high end processors like the Qualcomm Snapdragon 820 or Samsung’s own Exynos 8890 chipset. The powerful processor is speculated to be paired with 3GB of RAM.

Related: Samsung Galaxy S7 Mini to rival iPhone SE specs for cheaper price