According to Digitimes, Amazon has been negotiating with TPK Holdings, Wintek, HannStar Display and J Touch about the supply of touchscreen displays. TPK Holdings and Wintek have both expressed doubts about their capacity to provide the panels to Amazon while still fulfilling existing orders from Apple.
The report says that Amazon plans to launch its tablet in the second half of 2011 and wants to ship four million tablets before the end of the year.
According to figures quoted by Apple Insider, Apple controls around 60 percent of the world's touchscreen panel capacity.
Rumors that Amazon was preparing to launch an Android-powered tablet have been circulating for a while but were as good as confirmed by CEO Jeff Bezos in May when he told Consumer Reports to "stay tuned" for news of a forthcoming device.
More recent reports have suggested that the Amazon tablet could launch in August or September, though don't expect an international launch any time soon - it took the Kindle nearly two years to make it outside of the US.
This story, "iPad 2 Production Could Mean Hassle for Amazon" was originally published by Macworld U.K..