Trial production of the wearable device has already started at Taiwan-based Quanta Computer.
Apple's first smartwatch could be launched in October with Taiwan-based Quanta Computer starting its mass production in July.
The wearable device has not officially been given a name but is known as iWatch and will compete against similar products from Google and Samsung Electronics, marking Apple's first entry into the niche product category.
Though it has been widely reported that Apple is building its own smartwatch, it had been unclear what Quanta's role in the project will be. It has previously been involved in the production of Apple's laptops and iPods.
But according to a report from Reuters, the trial production of the wearable device has already started at Quanta, which will be the main producer of the device and will be responsible for at least 70% of its final assembly.
iWatch could come with multiple screen sizes and feature more than 10 sensors including sensors to track health and fitness, sources told Wall Street Journal. It is expected to feature a 2.5 inch diagonal display and come in a slightly rectangular shape.
Similar to other smartwatches, it will be compatible with iOS operating system and can be paired with a smartphone to carry out voice and messaging tasks while it wil also be able to carry out some tasks independent of smartphones.
Screen components for the smartwatch could be supplied by LG Display for the initial batch while sensor components could be supplied by Singapore-based imaging and sensor maker, Heptagon.
Apple plans to ship about 50 million smartwatches within the first year and will be competing against Samsung, Sony, Motorola and LG Electronics.