To counter the competitive threat from Google's TPUs, NVIDIA avoids direct price cuts that would hurt its gross margins. Instead, it offers strategic equity investments to major customers like OpenAI, effectively providing a "partner discount" to secure their business and maintain its dominant market position.

Contrary to typical competitive behavior, major memory chip manufacturers intentionally limit their market share with any single customer. They prefer their clients, like Dell, to be multi-sourced from their competitors. This ensures a more resilient and stable supply chain for the entire ecosystem, prioritizing long-term stability over short-term dominance.

When power (watts) is the primary constraint for data centers, the total cost of compute becomes secondary. The crucial metric is performance-per-watt. This gives a massive pricing advantage to the most efficient chipmakers, as customers will pay anything for hardware that maximizes output from their limited power budget.

TSMC's "pure-play foundry" model, where it only manufactures chips and doesn't design its own, builds deep trust. Customers like Apple and NVIDIA can share sensitive designs without fear of competition, unlike with rivals Intel and Samsung who have their own chip products.

Despite soaring AI demand, chip fab TSMC is conservatively expanding capacity. This is a rational move to avoid the catastrophic downside of overcapacity, where fixed costs sink profitability for years. However, this decision is creating a massive, predictable chip shortage for the AI industry.

High margins create stability but also invite competition. The ideal strategy is to operate with margins low enough to build customer loyalty and a competitive moat, while retaining the *ability* to raise prices when necessary. This balances long-term growth with short-term financial resilience.

Instead of competing for market share, Jensen Huang focuses on creating entirely new markets where there are initially "no customers." This "zero-billion-dollar market" strategy ensures there are also no competitors, allowing NVIDIA to build a dominant position from scratch.

Taiwan's TSMC dominates advanced chip manufacturing not only through technical excellence but also its business model. By acting as a pure-play foundry that doesn't compete with its clients (unlike Intel or Samsung), it fostered unique trust and partnerships, making it the central hub of the semiconductor ecosystem and a critical geopolitical asset.

In a power-constrained world, total cost of ownership is dominated by the revenue a data center can generate per watt. A superior NVIDIA system producing multiples more revenue makes the hardware cost irrelevant. A competitor's chip would be rejected even if free due to the high opportunity cost.