According to Japanese blog Macotakara, the production of the next generation iPhone (also known as iPhone 5) has started in China. Macotakara has cited reliable Chinese sources for the information.
For reference, Macotakara also cited similar sources when they reported that the iPad 3 first went into production in January 2012. The lead time between production and launch for the iPad 3 was approximately two months with an official launch date of 16 March 2012. That could suggest that we may see the new iPhone as early as September, though the production timelines for the iPad and iPhone can and may differ significantly.
Meanwhile, the Wall Street Journal (WSJ) had previously reported that the iPhone 5 would begin production in June. All signs have pointed to a September or October launch for the new iPhone.
Source: Mac Rumors
Image Source: Macotakara