Sony will reportedly begin production of the PlayStation 4 by the end of this year according to a report by DigiTimes, a Taiwanese daily newspaper for semiconductor, electronics, computer, and communications industries. This fits well with an earlier report stating that the PS4 was in active R&D according to a statement by Masaru Kato, Sony’s Chief Financial Officer.
The report states that Sony will ask its Taiwan-based partners will begin production of the PS4, sporting Kinect-like body movement-based control system, at the end of 2011, so that it is ready for a 2012 launch. Foxconn and Pegatron Technology (an ASUS subsidiary), who undertake the assembling of the PS3, will assume the same responsibility for the PS4 as well.
Sony plans to ship 20 million units of the upcoming console next year, also as claimed by the report. Being a rumour, you are advised to take this with a pinch of salt.