AMD and Nvidia were in talks to merge at one point, apparently the talks fell apart because Nvidia's CEO insisted on being the new CEO of the combined company and AMD would have none of that. So they purchased ATI instead, probably overpaid for it and probably pushed the bulldozer concepept to hard in an effort to prove it was worth it after all.

Nvidia actually used to develop chipsets for AMD processors include onboard GPUs, they did for Intel as well but they had a much more serious relationship with AMD in my estimation. This stopped with the ATI purchase since ATI is nvidia's main competitor the two companies stopped working together. Intel later killed all 3rd party chipset altogether and AMD had to do a lot of chipset work they weren't doing before.

I sometimes wonder what would have happened if they had merged back then. I personally think a Jensen Huang run AMD would have done much better than AMD+ATI did in that era. I could easily see ATI having collapsed. What would the consoles use now? Would nvidia have been as aggressive as it has been without the strategic weakness of now controlling the platform it's products run on?