By funding and backstopping CoreWeave, which exclusively uses its GPUs, NVIDIA establishes its hardware as the default for the AI cloud. This gives NVIDIA leverage over major customers like Microsoft and Amazon, who are developing their own chips. It makes switching to proprietary silicon more difficult, creating a competitive moat based on market structure, not just technology.

TSMC's new Arizona factory can produce NVIDIA's advanced chips, but this doesn't solve US supply chain dependency. The chips must still be shipped back to Taiwan for the critical advanced packaging stage, meaning the primary bottleneck remains firmly in Asia despite onshoring manufacturing.

For companies like NVIDIA or Google, moving from TSMC to Intel or Samsung is not a simple supplier switch. It necessitates a complete redesign of the chip's architecture to fit the new foundry's technology. This complex and costly process can take one to two years, making it a last resort.

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.

Apple crushed competitors by creating its M-series chips, which delivered superior performance through tight integration with its software. Tesla is following this playbook by designing its own AI chips, enabling a cohesive and hyper-efficient system for its cars and robots.

For a hyperscaler, the main benefit of designing a custom AI chip isn't necessarily superior performance, but gaining control. It allows them to escape the supply allocations dictated by NVIDIA and chart their own course, even if their chip is slightly less performant or more expensive to deploy.

Google training its top model, Gemini 3 Pro, on its own TPUs demonstrates a viable alternative to NVIDIA's chips. However, because Google does not sell its TPUs, NVIDIA remains the only seller for every other company, effectively maintaining monopoly pricing power over the rest of the market.

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.

NVIDIA's annual product cadence serves as a powerful competitive moat. By providing a multi-year roadmap, it forces the supply chain (HBM, CoWoS) to commit capacity far in advance, effectively locking out smaller rivals and ensuring supply for its largest customers' massive build-outs.