San Francisco, Sep 3 (IANS): Apple's anticipated Augmented Reality and Virtual Reality (AR/VR) headset will need to be wirelessly tethered to an iPhone or another Apple device to unlock full functionality.

According to a report from The Information, Apple is working on a custom chip for the headset.

The headset will be similar to the WiFi-only version of the Apple Watch, which requires an iPhone connection to work.

The iPhone maker may use a fabric exterior to reduce the headset weight, but the company is also using a fan, an unusual move for Apple given its emphasis on fan-less design.

The upcoming Apple VR headset will be similar to the Oculus Quest, and some prototypes being tested include external cameras to enable some AR features.

Apple is also reportedly testing the ability to use these cameras to track hand movements, and include software features like a virtual keyboard.

In addition, the VR headset will be considered a niche product and could be "far more expensive" than the $300 to $900 headsets available from rivals.

Apple is developing two head-worn products, including a combination AR/VR headset for release in 2022 and "full-fledged" AR glasses for release by 2023.

Apple is planning to reach out to third-party developers as early as 2021 to encourage them to build apps for the hardware.

The AR headset is expected to sport a sleek design so that it is lightweight and comfortable for the wearer to roam around for prolonged periods.