Adds background on Apple Intelligence in paragraphs 4 and 5, details on iPad in paragraph 7

March 4 (Reuters) - Apple AAPL.O on Tuesday launched new versions of its iPad Air, enhancing the mid-tier tablet with its M3 chip and artificial intelligence capabilities in a bid to spur upgrades among customers.

The revamped lineup starts at $599 for the 11-inch model, and the 13-inch variant at $799. Pre-orders open Tuesday, with deliveries set to start on March 12.

Apple has been equipping its devices with more powerful chips designed to handle AI tasks, such as summoning ChatGPT to answer user queries, as it seeks to attract customers and keep pace with rivals including Samsung 005930.KS and China's Huawei that are racing to embed AI into their products.

Last month, the company launched a budget-minded phone, iPhone 16e, lowering the entry barrier for its phones with Apple Intelligence to around $600 to win back customers looking to buy mid-range phones in key markets such as India.

Apple Intelligence is a set of features with access to ChatGPT that lets users write emails, messages and edit photos among other capabilities. While Apple Intelligence was not immediately available when the iPhone 16 series was launched in September last year, the company has since been rolling out a suite of AI features in more languages and regions in phases.

Last May, Apple introduced a generation of iPad Air with M2 chip, with the 11-inch device sporting the same price as the latest version.

The company said on Tuesday that while it has updated the regular iPad with double the storage for the base variant and the A16 chip, the product will not support Apple Intelligence.

The company's iPad sales came in at $8.09 billion for the holiday quarter, above estimates of $7.32 billion, according to data compiled by LSEG. Over half of the sales in the three-month period were to customers who were new to iPad, the company said.

(Reporting by Juby Babu in Mexico City and Akash Sriram in Bengaluru; Editing by Devika Syamnath and Shinjini Ganguli)

((Juby.Babu@thomsonreuters.com;))