If they manage to move a significant part of ML compute from datacenter to on-device, and if others follow, that might hurt Nvidia's bottom line. Big if at this point, but not unthinkable.
Then there's the issue of model size. You can fit some pruned models on an iPhone, but it's safe to say the majority of research and development is going to happen on easily provisionable hardware running something standard like Linux or FreeBSD.
And all this is ignoring the little things, too; training will still happen in-server, and the CDN required to distribute these models to a hundred million iPhone users is not priced attractively. I stand by what I said - Apple forced themselves into a different lane, and now Nvidia is taking advantage of it. Unless they intend to reverse their stance on FOSS and patch up their burned bridges with the community, Apple will get booted out of the datacenter like they did with Xserve.
I'm not against a decent Nvidia competitor (AMD is amazing) but the game is on lock right now. It would take a fundamental shift in computing to unseat them, and AI is the shift Nvidia's prepared for.
Has Nvidia not done that too? They shipped ML-capable consumer hardware before Apple, and have revolutionary SOCs of their own. On top of that, they have a working relationship with the server/datacenter market (something Apple burned) and a team of researchers that basically wrote the rulebook on modern text and image generation. Then you factor in CUDA's ubiquity - it runs in cars, your desktop, your server, your Nintendo Switch - Nvidia is terrifying right now.
If the rest of your argument is a feeling that Apple will turn the tables, I'm not sure I can entertain that polemic. Apple straight-up doesn't compete in the same market segment as Nvidia anymore. They cannot release something that seriously threatens their bottom line.