(Bloomberg) -- Apple Inc., fresh off the release of the iPhone 16, is preparing to announce a new low-end phone early next year alongside upgraded iPads.

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The company is nearing production of an updated iPhone SE — codenamed V59 — that will become its new entry-level model, according to people with knowledge of the matter. Apple is also aiming to manufacture new iPad Air models and keyboards for release around the same time, said the people, who asked not to be identified because the plans aren’t public.

The release will mark the first update to the iPhone SE since 2022, when Apple added 5G capability to the device. With the latest model, Apple will move away from the old home button design and transition to an edge-to-edge screen.

The SE overhaul will help Apple compete in the low-end smartphone market, where it faces tough competition from Android devices — especially in China. The current model costs $429, which is hundreds less than the standard iPhone but more expensive than many of its rivals. Modernizing the SE so it looks more like its higher-end siblings should help entice budget-minded shoppers and potentially win back market share lost to brands such as Huawei and Xiaomi.

The new SE phone is expected to support Apple Intelligence, an upcoming suite of AI tools that will also work with the iPhone 16 and the high-end versions of last year’s iPhone 15. The new model will resemble the iPhone 14, including the notch cutout at the top. The current SE more closely resembles the iPhone 8, the last standard version to include a home button.

A spokesperson for Cupertino, California-based Apple declined to comment.

The new iPad Air models — codenamed J607 and J637 — will focus on internal improvements. Apple also is preparing an updated version of its Magic Keyboard accessory, codenamed R307 and R308, for both the 11-inch and 13-inch versions of the new Air. These will bring some of the features of the iPad Pro keyboard down-market.

Earlier this year, Apple updated the Air lineup with an M2 chip and added the 13-inch screen option. A new iPad mini — codenamed J410 — is coming too, potentially by the end of 2024.

A revamped version of the iPad Pro was released at the same time as this year’s iPad Air, but that higher-end device includes an M4 processor that has yet to come to other models. That means an update is less urgent given the chip is already a generation ahead.