Nvidia and Arm are simultaneously competing (Nvidia sells its own Arm-based CPU) and cooperating. Every Arm-based Nvidia chip sold helps challenge the Intel/AMD x86 duopoly and expands the software ecosystem for Arm architecture, which in turn benefits Arm's own direct chip sales.

To overcome political hurdles and NVIDIA's dominance, Cerebras partnered with AWS by creating a joint architecture that combined its chip with AWS's own Tranium IP. This turned a potential internal competitor into a champion and gave AWS a unique, competitive offering.

Nvidia is moving beyond just selling GPUs to become a platform company. By proactively partnering with smaller rivals like D-Matrix, it ensures its own hardware remains central to complex AI systems. This "coopetition" strategy aims to maintain ecosystem dominance even as diverse chip architectures emerge, countering the narrative that Nvidia only seeks to eliminate competition.

NVIDIA and ARM are engaged in 'coopetition.' While they directly compete with their respective ARM-based CPUs, their combined success strengthens the ARM software ecosystem. This creates a powerful, unified front that challenges the longstanding dominance of the x86 architecture from Intel and AMD in the data center.

NVIDIA doesn't simply sell its scarce chips to the highest bidder. It strategically allocates them to cultivate a diverse ecosystem of cloud providers and customers. This prevents any single customer from becoming too powerful and ensures healthy competition among its buyers, which ultimately drives more demand for NVIDIA's hardware.

Tech giants often initiate custom chip projects not with the primary goal of mass deployment, but to create negotiating power against incumbents like NVIDIA. The threat of a viable alternative is enough to secure better pricing and allocation, making the R&D cost a strategic investment.

Arm evolved from licensing IP to offering subsystems and finally physical chips. This was a direct response to customer demand (like Meta's) for faster solutions, as not all licensees could build chips themselves quickly enough, thus expanding Arm's total addressable market.

The AI hardware ecosystem requires intricate partnerships, forcing rivals to invest in the same companies. Just as Google and Amazon both backed Anthropic, Nvidia is now a major financial partner to MediaTek, a key supplier for its competitor Google. This strategy is now essential for hedging bets and capturing value.

Unlike a typical monopolist, NVIDIA's strategy isn't to squeeze every dollar of margin. Instead, Jensen Huang actively invests in and supports the entire AI ecosystem, even potential competitors. The goal is to ensure the overall market for AI thrives, creating a bigger pie and cementing NVIDIA's central role for the long term.