How Nvidia and its partners built world’s most powerful AI empire

In a recent article by Bloomberg, it was highlighted how the world has witnessed a massive boom in artificial intelligence since the launch of ChatGPT, reshaping industries and propelling tech giants to new heights of dominance. At the heart of this transformation is Nvidia, a company that has gone from being a gaming hardware maker to controlling a staggering 92% of the AI chip market.

However, Nvidia’s success has not come alone. The company’s rise has been supported by its key manufacturing partners—SK Hynix, TSMC, and ASML—all of whom play pivotal roles in shaping the AI chip ecosystem. Together, these companies have created some of the most valuable monopolies in history, with a combined market value exceeding $4 trillion by mid-March 2025.

This dominance of Nvidia and its partners has raised concerns about the future of competition in AI. While some view this as a natural result of scale and innovation, others worry that such control could stifle competition and result in higher prices for consumers. The question remains: can Nvidia and its partners maintain their positions, or will the AI boom be subject to the same forces that have disrupted other tech monopolies in the past?

Nvidia’s ascent began with a strategic pivot from gaming to AI. Originally known for its graphics processing units (GPUs) that powered video games, Nvidia made a decisive bet on the potential of its chips for deep learning. This shift was accelerated in 2016 when Nvidia provided OpenAI with a set of powerful GPUs for deep learning at a pivotal moment in the company’s development. Over the years, Nvidia has built a vast ecosystem around its GPU architecture, CUDA, making it the only viable option for AI companies looking to build large-scale language models like ChatGPT.

But Nvidia’s monopoly in AI is not solely due to its chips. The company relies on three critical suppliers that have their own near-monopolistic market positions. SK Hynix, based in South Korea, supplies the high-bandwidth memory (HBM) chips that power Nvidia’s GPUs, controlling around 80% of the HBM market. TSMC, based in Taiwan, manufactures the chips based on Nvidia’s designs, dominating the foundry business and producing 99% of the world’s AI accelerators. ASML, a Dutch company, holds a unique position as the sole provider of the advanced chip-making machines needed to produce cutting-edge semiconductors, selling its €380 million machines to TSMC and others.

While the power of these companies has gone largely unchallenged, they are not without rivals. Startups and industry giants like Amazon, Microsoft, and Google are investing heavily in AI chip development to reduce their dependence on Nvidia. Amazon, for example, is working on its own custom AI chips, while Microsoft has partnered with Advanced Micro Devices (AMD) to create an alternative to Nvidia’s offerings. Even OpenAI, once a key customer, is exploring its own chip design, potentially bypassing Nvidia entirely.

Despite these efforts, Nvidia’s position remains strong, with the company’s chips continuing to be the gold standard for AI processing. Nvidia's success also hinges on the massive infrastructure spending from the tech giants who rely on its hardware. Microsoft, Meta, and Google are collectively spending billions on AI infrastructure, pushing Nvidia’s market value to new heights. But as demand for GPUs grows, so too do the costs, with Nvidia’s GPUs skyrocketing to as much as $90,000 in recent years. This has led to concerns that Nvidia’s pricing power could eventually backfire, with rivals seeking to break free from its grip.

However, Nvidia’s dominance is not invulnerable. The tech sector is notoriously fast-moving, and smaller companies are continually innovating. DeepSeek, a Chinese startup, recently demonstrated that it could develop competitive AI models with older Nvidia chips, suggesting that there are alternative paths to creating AI systems without relying on Nvidia’s cutting-edge hardware. While DeepSeek’s breakthrough has yet to prove disruptive, it highlights the potential for innovation to challenge Nvidia’s reign.

Furthermore, Nvidia’s dominance is not immune to regulatory scrutiny. The US Justice Department is currently investigating whether Nvidia has engaged in anti-competitive practices, such as preferential pricing or bundling, which could limit competition. These investigations, alongside growing concerns over market concentration, suggest that the dominance of Nvidia and its partners may be tested in the future.

Despite these challenges, Nvidia’s position as a leader in AI technology remains formidable. The company’s integration of hardware, software, and supply chain is a significant advantage, and it continues to outpace rivals in developing faster, more efficient chips. Whether this dominance will last, however, is uncertain. As AI technology evolves and new competitors emerge, Nvidia and its partners will have to stay ahead of the curve to maintain their grip on the market. For now, the AI boom continues to be a lucrative one for these tech giants, but the industry remains on the edge of significant disruption.