Those murky "supply chain sources" are saying that Apple wants to diversify its screen panel suppliers - both for current and future iPhones, as the yields have been inconsistent from the current crop of iPhone screen panel makers. AUO is apparently in flux to start making 4.7- and 5.5-inch LTPS In-Cell displays at its L3A and 3B fabs, as well as a the elusive 4-inch panel we keep hearing about.
Other reports from Taiwanese media, however, insist that the AUO screens, including the 4" one, won't get in play until Apple's 2016 crop of handsets. Does that mean that we will have to wait for an iPhone 7c next year to know for sure if Apple is preparing another "budget" $500 handset after the 5c fiasco? Unlikely, as we will probably hear much more about it sooner than that.