Intel is fabbing a lot of things that aren't necessarily their "IP", they like to keep their Fabs busy and running at full capacity even the older ones. Arguably Intel is still making the best Fabs out there, their process tends to be the best in even when compared to TSMC/GoFo and IBM and they are very good at optimizing their entire fabrication process (the non-lithography side) so their Fabs just tend outperform the competition.

Tho that said Intel doesn't want to morph into a Fab as a service company, they just don't want to leave money on the table if they can't fill their 14nm and 10nm Fabs with their own IP/silicon they build it for some one else. It's even more so important now since Intel's dies are pretty darn big even as it comes to 14/10nm optimizing processes on smaller dies can be quite valuable to them. And considering they are dropping their "Tick Tock" methodology or at least altering it somewhat their Fabs can outrun their product line which is never good.

Which only means ARM chips will become even more competitive with x86 chips. Intel seems to want to be in the "dumb chip manufacturer" market (kind of like how ISPs are "dumb pipes") - because if this business pans out for them, then the x86 business will struggle even more as a direct consequence of it. x86 was barely competitive with ARM at the same performance and power consumption level when Intel was using its manufacturing edge against ARM chip makers. If that gets equalized, then ARM chips should win big against Intel's own chips.

However, I expect Intel to try and shoot itself in its own foot in this business, for the same reason they killed Xscale previously. Because Intel is at a cross-point now (pun intended). They have to make a choice - either they "go big" with ARM chip manufacturing, or they try to protect the interests of the x86 division. They may put all sorts of caveats on ARM chip customers that want to buy Intel's manufacturing, so their chips can't compete directly with Intel's own x86 chips. But that will significantly hurt the potential of its ARM chip manufacturing business - so then may have to ask themselves, why are they even bothering with ARM chip manufacturing, if they're not going to go all-in on it?

So either Intel repeats its Xscale mistake by protecting the x86 chip business, and risks being completely left out of the mobile/IoT markets forever (in any capacity), while also losing a few more billions of dollars with this "ARM manufacturing experiment". Or it goes all-in with ARM chip manufacturing, manufacturing anything from IoT ARM chips to Xeon ARM competitors for anyone from MediaTek to Qualcomm, and then its x86 risks a severe decline over the next decade.

Either way, Intel has to make a choice. They can't have their cake and eat it, too, no matter how much they'd wish that to happen right now.

Intel "dumped" Xscale on Marvell but it didn't stop manufacturing them, Intel is still manufacturing for Marvel and for many other companies. Besides Marvel Intel has been manufacturing FPGAs for Altera, and at least 5 other companies are using Intel Fabs to make their own silicon (Achronix, Tabula, Netronome, Microsemi, Panasonic).

http://blogs.wsj.com/digits/2013/05/01/microsemi-emerges-as-...

In fact one can argue about the brilliant move Intel made here, Intel opens up it's Fabs to 3rd parties, various companies including the leading FPGA designers jump onto it. 3-4 Years later Intel starts exploring integrating FPGAs into it's Xeon CPU's and SOCs, that's not coincidence when you fabricate something you have technology transfer even if it's completely "unintentional", furthermore Intel gains a lot of experience in fabricating and optimizing FPGAs silicon and they do it on some one else's dime while being paid heftily for it.

So I don't really think your conclusion of Intel's strategy is correct, Intel can very well keep the cake and eat it, Intel makes ARM CPUs and SOCs Intel gains experience and knowledge in producing and testing new silicon, Intel gains access to technologies that it could later implement in its own line of X86 CPUs to further optimize their microarchitecture for multiple cores, asymmetrical CPU designs, power efficiency etc.

So I don't see Intel being at a crossroads, they don't have to go big with ARM or go home, they just need to get enough ARM chips out the door to be profitable and considering Intel's fab efficiency it's not hard for them to do, and in the meantime gain enough knowledge and experience to improve their own IP and designs. Intel has made the bet once that I would take ARM just as long to get to X86 performance levels as it would take Intel to get X86 down to ARM's power levels and they made the right bet at the time, and I'm pretty sure they also made the right bet this time around also.

Still I would like for them to keep improving the x86, otherwise we will eventually just switch our chip overlord.

AArch64 is a very clean ISA. From an architectural point of view, I wouldn't be upset if AArch64 eroded away x86-64.

Of course, I don't want to sacrifice competition. It'd be awesome to see Intel and ARM competing in features, performance, power, and price on a simple target for compilers and programmers.

(Yes, I know as a practical matter x86-64 will never go away; it's simply that I like the direction the market is going.)