Sharp has fallen behind schedule on production of screens for Apple's latest iPhone just weeks before a planned major launch.
The Japanese display maker is struggling with high costs that have cut into its margins on the screens, raising the question of whether Apple might provide financial incentives to speed up production, the source said.
The anonymous source, who is familiar with Sharp's production operations, did not give Reuters an indication of how far behind the output had fallen.
Sharp President Takashi Okuda said on August 2 that his company would begin mass production and shipments from its Kameyama LCD plant in central Japan this month.
The facility is widely known to make screens for Apple, but Sharp has declined to acknowledge that Apple is a customer.
Kameyama "is operational," Sharp spokeswoman Miyuki Nakayama said, without giving details of either output or shipment levels.
Apple, which is also tapping other suppliers such as Japan Display and South Korea's LG Display for displays, is planning a major product launch on September 12.
That has raised expectations the latest iPhone model will be in stores soon.
The new iPhone screens will be thinner than previous versions with the use of so-called in-cell panels.
The new technology embeds touch sensors into the liquid crystal display, eliminating the touch-screen layer found in current iPhones.
Sources earlier told Reuters that the panels will extend 4 inches corner to corner - 30 per cent bigger than current iPhones.
Sharp's shares slid 13 per cent at the end of the week to 198 yen as uncertainty swirled around talks with Hon Hai Precision Industry for the Taiwanese company to buy a 9.9 per cent stake in its fellow Apple supplier.