Shares of the Cupertino, Calif., company at last check were off slightly to $152.37.
The makers of the Apple Watch 7, which the device is likely to be called, began small-scale production last week but encountered critical challenges in reaching satisfactory production performance, Nikkei Asia reported.
The current disappointing production quality could be attributed to the complexity of design, Nikkei Asia, said, citing people familiar with the situation. That's significantly different from that of previous generations of the watch.
The assemblers found issues when putting together electronics modules, components and displays.
The new watch's production has been temporarily halted as Apple and its suppliers try to sort out the problems and further certify the designs before going into mass production.
The COVID-19 pandemic has also made travel difficult for Apple and its suppliers.
The device will reportedly come with new features such as blood pressure measurement, meaning production involves fitting a greater number of components into a similar size body.
The next Apple Watch must also meet requirements for water-resistance performance, further increasing the engineering and production challenge.
The company had originally planned to put Apple Watch 7 into mass production around mid-September.
Apple was scheduled to unveil the new watch along with the latest iPhones in the coming weeks. The current issues might affect the company's shipment plans following the unveiling.
Since it launched in 2015, Apple Watch has led the smartwatch market with a more than 50% market share in 2020.
Apple Watch saw a 40% increase in sales between 2019 and 2020, according to Strategy Analytics.
Apple did not immediately respond to a request for comment.