Technology website AnandTech spotted that Intel (NASDAQ:INTC) issued a product-change notification on Aug. 7, announcing that the Atom x5-Z8100P system-on-a-chip (SoC) used in Microsoft's (NASDAQ:MSFT) HoloLens has been discontinued.

According to Intel's announcement, the company will stop taking orders for the chip on Sept. 30, and the last ship date for the chips will be a month later, on Oct. 30.

The Microsoft HoloLens mixed reality headset.

Image source: Microsoft.

This announcement has led to some speculation in the tech press about what kind of SoC Microsoft will use in future iterations of the HoloLens.

Joel Hruska with ExtremeTech thinks Microsoft will have an ARM-based SoC vendor build the next HoloLens SoC, after raising and then ruling out the possibility that Intel and Microsoft will collaborate on a future chip for a future HoloLens.

"Microsoft may have paid Intel for a custom Atom SoC before, but that was back when Intel was still committed to selling Atom chips across the tablet and smartphone markets," Hruska writes. "It's one thing to be a semicustom customer for the mildly custom part that's being sold elsewhere, and something else entirely to be the only customer the company expects to have for an entire hardware line."

Here's why I disagree with Hruska's line of reasoning.

Atom for phones and tablets is dead, but...

The Atom x5-Z8100P was clearly a derivative of the company's Atom x5-series of chips aimed at the tablet SoC market.

It's true that Intel is no longer explicitly building SoC products for the tablet and phone markets based on Atom, but do note that Intel does still develop Atom-based SoC products for a wide range of markets that are substantially like the kinds of chips Intel tried to sell into tablets and phones.

For example, although Intel cancelled a smartphone and tablet platform codenamed Broxton, the same basic chip technology lived on to power the company's Atom-based chips for low-cost personal computers as well as a range of chips aimed specifically at Internet of Things applications, such as in-vehicle infotainment.

Intel is expected to launch its next-generation Atom architecture, known as Gemini Lake, later this year.

Last quarter, Intel's Internet of Things business enjoyed 18% revenue growth and more than 56% operating profit growth. So considering Intel continues to invest heavily in its successful Internet of Things business, and considering the Microsoft HoloLens would be categorized as an Internet of Things device, I wouldn't count Intel out of a future HoloLens.

In fact, if Intel really wants to get out in front, it will work with Microsoft to build a customized SoC based on its core Atom technologies specifically suited for the HoloLens, rather than adapting an existing design to a future device.

Intel already has the necessary ingredients to spin a credible next-generation HoloLens SoC -- it just needs to be willing to go the extra mile to assemble them in just the right proportions to meet Microsoft's needs.

I think there's a good chance that Intel will do just that. The HoloLens might not be a money spinner for Intel or Microsoft, but the experience Intel could gain in building customized chips for Microsoft's platform could help it build general-purpose platforms for broader adoption in the future if devices like the HoloLens go mainstream.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.