The rumor comes by way of Taiwanese newspaper Economic Daily News. This publication was one of the first to accurately state from sources that the iPad was going to be a tablet, not a netbook. The publication is citing its sources again that claim several Taiwanese firms are actively working on parts for the iPad 2.
The new iPad is said to have a 7-inch screen with the same IPS tech as the current iPad. That screen is supposedly coming from Chimei Innolux with touchscreen tech coming from Cando Corporation. The rumor also claims that the iPad 2 is being built by Compal Electronics.