According to Digitimes, Apple has looked towards the US company Jabil for forging stainless steel frames for its 2017 handsets. The last iPhone that employed stainless steel was the iPhone 4s, but it used a different manufacturing process.
The frame of the iPhone 4s was milled by a CNC machine. This basically means that a big computer-controlled machine cut out the frame from a huge chunk of steel. Forging, on the other hand, is the process of pressing the steel into shape, either with a power hammer or a press, with the help of various tools and dies.
It's expected that the stainless steel frame will be wrapped around a glass-sandwich design, which should help for better scratch resistance. The stainless steel will be more costly for Apple than the aluminum it's been using in the last few iPhone generations, but it should give the handset a more premium and sturdy feel.