Apple's smartwatch will likely be launched in the fall, with manufacturer Quanta Computer Inc of Taiwan slated to will start mass production in July, according to Reuters.
Sources said Apple will introduce a smartwatch with a display about 6 cm in diameter with a touch face and wireless charging.
There will likely be multiple versions of the device, offering functions that might be different from a smartphone.
There may also be differing designs, as watches are fashion items. Apple has hired a former chief executive of French fashion house Yves Saint Laurent, Paul Deneve, for what it called "special projects."
Among the likely functions are sensors to track health and fitness, including heart rate. Apple showed its interest in health and fitness-tracking last month with a new app called Health, designed to collect all of a user's fitness and health data in one spot
Apple's entry into the wearable device market is hotly anticipated, though it is behind rivals such as Google Inc. and Samsung Electronics.
It is hoped that Apple's device will be the breakthrough that makes smartwatches into widely popular devices, just as the introduction of iPhone built the smartphone market.
Apple's watch will be able to perform some functions independently, but tasks like messaging and voice chat will require connection to a smartphone or other device run on Apple's iOS operating system.
The company is under pressure to break into new market segments as it's been four years since the release of the iPad. Under CEO Tim Cook, the company has been investigating the connected home and a wearable device would be a significant new area of growth.
Market research firm IDC estimates global sales of wearable devices will more than triple this year to more than 19 million units and swell to 111.9 million units by 2018.
Reuters reports Quanta, which manufactured laptops and iPods for Apple, may be gearing up to produce as many as 50 million units of the product dubbed iWatch.
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