The next iPad is expected to go on sale in March and will sport a high-definition screen, run a faster processor and work with next-generation wireless networks, according to a US report this weekend.
The report from Bloomberg cited three people familiar with the product.
It said Apple's manufacturing partners in Asia started ramping up production of the iPad 3 this month and plan to reach full volume by February.
The new tablet will use a quad-core chip "an enhancement that lets users jump more quickly between applications," according to two of the informants.
Since its launch in 2010, Apple has sold more than 40 million iPads, generating more than $25 billion in sales.
One aim is reportedly to make the iPad compatible with a wireless standard called long-term evolution, or LTE.
The new iPad is reportedly being assembled at Apple's main manufacturing partner, Foxconn Technology. The rollout will be Apple's first major hardware release since the death of Steve Jobs in October.