Intel's recent payouts - over $3billion in fines/compensation, $2billion of which went to AMD (alright, I'm rounding), is 25ish% of their cash pile. And Intel didn't have to lose it. They brought it on themselves with some sharp marketing practises, and that's their fault. No wonder there's some unhappy share holders.
Sure, AMD and Intel do compete, and some would argue that AMD are architecturally superior. But the real competition is increasingly looking like it will come from ARM and friends. (@Ogi - Intel sold Xscale to Marvel, and that's looking like a real mistake now).
There's 2GHz ARMs that consume 0.25W out there right now. It's a level of power consumption that neither AMD or Intel get anywhere near. It's likely plenty enough compute power for anyone's normal day to day needs. This offers the prospect of smallish hand carried devices that do everything you need as quickly as any x86 device can do it, but runs for ages on a small battery. Now who wouldn't want one of those?
Certainly much more attractive than carrying round Atom based netboooks which, so far as I can tell, are generally just like crap old laptops from the bad old days but don't have much battery life advantage over a standard laptop.
I don't think Intel can sensibly rejoin the ARM club without looking very silly. AMD could join in, but there's already plenty of fabs out there churning out some very impressive parts, so AMD would really struggle to differentiate themselves from the rest of the herd.