After the launch of the iPhone 6 in September 2014, it seemed pretty clear that Apple was planning on going larger for future iterations. The iPhone 6s, released a year later with the same form factor, only seemed to confirm this fact.
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However, during the Let Us Loop You In Apple event on March 21, 2016, Apple announced a new, smaller 4-inch smartphone: the iPhone SE.
Despite the company's push for larger devices, Apple sold 30 million 4-inch iPhones in 2015. The iPhone 5s (the previous 4-inch model Apple produced) still proved incredibly popular among people buying their first smartphone.
With the increasing popularity of new devices and the consequential phasing out of older models, Apple needed a solution to fill the 'budget' smartphone space in their lineup. And with the iPhone 5c (their first attempt at a budget model) coming up almost three years ago, they needed something new to fill the void in their product lineup.