This approach actually would make sense if AMD felt, like most of us perhaps, that the NVIDIA ecosystem is too entrenched, but perhaps they made the decision recently to discontinue funding because they (now?) feel otherwise.
What happens here is that the original vendor loses control of the API once there are multiple implementations. That's the best possible outcome for AMD.
In either case, they have a limited window to be adopted, and that's more important. The abstraction layer here helps too. AMD code is !@#$%. If this were adopted, it makes it easier to fix things underneath. All that is a lot more important than a dream of disrupting CUDA.
At the same time, open source projects can be pretty nimble in chasing things like changing APIs, potentially frustrating the effectiveness of API pivoting by NVIDIA in a second way.