Apple has reached the proof-of-concept stage for sensor technology that could ultimately allow Apple Watch wearers with diabetes to monitor their blood sugar levels, according to a Bloomberg report. A few unnamed insiders who were familiar with the incredibly covert project - referred to within the firm as E5 - were quoted in Bloomberg's report. The sources claimed that after more than a decade of development, E5 has lately achieved "important milestones" that have given Apple hope for the viability of the technology in the marketplace.

Apple declined to reply to requests for comment from Fierce Medtech and declined to comment on the Bloomberg report. According to the article, Apple is now developing an iPhone-sized prototype that may be attached to a person's bicep. If Apple were to include it in a future Apple Watch, it would need to be substantially smaller.

The source claims that TSMC has been charged with developing the core chip for the sensor, which will be used in Apple's glucose tracker.

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“Apple is taking a different approach, using a chip technology known as silicon photonics and a measurement process called optical absorption spectroscopy. The system uses lasers to emit specific wavelengths of light into an area below the skin where there is interstitial fluid - substances that leak out of capillaries - that can be absorbed by glucose. The light is then reflected back to the sensor in a way that indicates the concentration of glucose. An algorithm then determines a person’s blood glucose level.”

Diabetics would be better able to identify the meals that are elevating their blood sugar levels if glucose levels were continuously and non-invasively monitored. Using that information, they might change their diet to maintain a steady blood sugar level.

The news weighed on shares of diabetes technology companies on Wednesday, with both Dexcom and Abbott falling more than 3% before recovering. Apple gained 0.3% to $148.91 by the close in New York, the Bloomberg report said.