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A Health Chip Is Part of a Broader Move by Apple Into Healthcare

By Danny Vena – Updated Aug 20, 2018 at 8:35AM

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A report that Apple is developing a chip to process data from its health and wellness sensors comes as no surprise.

It's no secret that Apple (AAPL -0.26%) has designs on the healthcare market. At the device maker's annual shareholder meeting earlier this year, Apple CEO Tim Cook signaled a broader interest in the field, saying that the company was in a "great position" to innovate because it wouldn't be reliant on reimbursements from insurers or federal programs like Medicare and Medicaid. "The more and more time we spend on this," Cook said, "the more excited I am that Apple can make a significant contribution here."

Apple's latest foray into the field may be its most ambitious yet. Apple's Health Sensing hardware segment is looking to hire engineers to develop custom chips to process data from "health, wellness, and fitness sensors," according to a job posting cited by CNBC. This could mark an even deeper move into healthcare by the iPhone maker.

Two Apple Watch Series 3, with the bands linked.

Image source: Apple.

A chip off the old block

The job posting cited a need for "sensor ASIC [application-specific integrated circuit] architects to help develop ASICs for new sensors and sensing systems for future Apple products. We have openings for analog as well as digital ASIC architects." An ASIC is a processor customized for a specific use or application.

The Apple Watch and iPhone already have a number of sensors, such as those to monitor heart rate and sleep quality, and the company has been working to develop others. Early last year, Apple was said to have a team of biomedical engineers working to create a noninvasive sensor designed to monitor blood sugar levels in those who have diabetes. Cook was reportedly wearing a next-generation watch prototype to monitor his own sugar levels, though a public version with those capabilities might still be years off. 

Developing a customized chip that better interacts with a variety of sensors could advance Apple's push further into the health field.

A broad interest in heart health

Late last year, Apple showed the first indication of its growing healthcare ambitions when it introduced the Apple Watch Series 3. The new Watch debuted an improved heart rate monitor that provides wearers with more accurate heart measurements during workouts and can detect potentially life-threatening spikes in a user's heart rate. 

Next, the company partnered with Stanford Hospital in a study to determine if the Apple Watch could accurately identify an irregular heart rhythm, which is often a precursor to a stroke. An earlier study sponsored by app maker Cardiogram showed the Apple Watch could detect atrial fibrillation -- a potentially serious heart ailment -- with 97% accuracy. 

Apple was also chosen as one of nine companies to participate in a pilot program with the U.S. Food and Drug Administration (FDA) to precertify companies creating software-based medical apps and devices. On the heels of that program, AliveCor's KardiaBand electrocardiogram (EKG) reader became the first FDA-approved medical device accessory for the Apple Watch.

AliveCor's KardiaBand on an Apple Watch.

Image source: AliveCor.

Big tech's interest in health is growing

Apple isn't the only technology company expressing an interest in the healthcare field. Earlier this year, Amazon, Berkshire Hathaway, and JPMorgan Chase announced a collaboration with an initial focus of providing employees with more cost-effective healthcare options.

Google parent Alphabet recently announced a sizable investment in start-up insurer Oscar, adding $375 million to an earlier infusion of $165 million. Oscar's goal is to rely heavily on data in an effort to make healthcare less expensive and more efficient. 

Apple is gradually expanding the health-related capabilities of its devices. With sales of smartphones leveling off, a move into healthcare could provide the company with another potentially lucrative opportunity.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Danny Vena owns shares of Alphabet (A shares), Amazon, and Apple. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, and Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool recommends Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.

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