Microsoft is working on an artificial intelligence (AI) chip for its next generation HoloLens headset.

And the U.S. technology giant could take it to other products in its hardware range, Panos Panay, corporate vice president of devices at Microsoft, told CNBC on Tuesday.

In July, Microsoft disclosed it was working on a processor for the second generation of HoloLens, a headset that allows users to interact and touch digital images overlaid on the real world. Microsoft calls this “mixed reality.” The AI chip will allow HoloLens to do things like recognize objects in the line of sight.

It marks Microsoft’s first foray into AI chips, as it looks to take on rivals such as Apple and Google.

The software giant is also looking to expand its offering. When asked by CNBC if Microsoft will introduce AI chips across the device range, Panay said “yes”.

“We have to continue to find those pieces of silicon, those chipsets that have to be developed to bring sensors to life, to connect people with each other and with their products,” Panay told CNBC in a TV interview.

Microsoft now has an array of devices. It has expanded its Surface line of tablets, which was launched in 2012, to include a laptop and desktop. It also has the Xbox gaming console and HoloLens headset.

There’s an arms race in AI chips at the moment. Huawei introduced its own AI chip called the Kirin 970 that it put in the Mate 10 smartphone released earlier this year. Apple’s new iPhones also have the company’s own A11 bionic chip inside.

Chips within devices allow those gadgets to use “AI on device.” This means that the devices don’t need to communicate with the cloud to do complex AI tasks, making them more efficient.

Panay said it works with partners and carries out in-house development to bring the chips to market. Microsoft also has a number of hardware partners. For example, Huawei and Lenovo both make tablet and keyboard devices that run Windows, the operating system made by Microsoft. Panay said that the company will look to license out its chips to partners.

“I think one of the most important things that we do in Surface and in our chip development is… the opportunity to make sure we get the technology created within Surface and then proliferate it with our partners and give everybody the opportunity to use it,” Panay told CNBC.

“I mean, this is where we can get technology out to more people.”