Intel is the 800 pound Gorilla in the room
So if AMD wants to survive, it has to outsmart Intel rather than outdo or compete directly.
That exactly was the case back when AMD introduced its initial Opteron processors and those were the best days of AMD. Intel tried to shift the 64-bit world towards Itanium and AMD made a smart move to go with x86 in the 64-bit game as its resources could not suffice to compete with a different ISA. Intel stuck with the stupid front-side bus in order to sell more chips, AMD introduced HyperTransport and the memory controller in the CPU. Intel was strictly proprietary, AMD chose a more open path with HyperTransport by engaging others to the game. Intel developed its own processes, AMD collaborated with IBM. Intel could pursue the hot magehertz race by being really aggressive on the process front, AMD could not and chose a wiser path of higher IPC - less megahertz that proved correct.
At some point, one would expect Intel to put its act together (as it did) and at that point AMD fell behind expectations. It seemed that its engine lost its steam. One failure after the other. The biggest mistake is that when AMD started to do well, it thought it could be Intel in the place of Intel. Unfortunately that was not the case.