Intel had (and still has) the option to offload manufacturing at any point, even if it's only supplementary.
Why? This is Intel's only advantage. It runs the most efficient fabs in the world. Spinning them off kills Intel because...
The real thing that is killing Intel is (and always has been) their lack of investment in actual architectural design and security. They had all the opportunity to make a better microarchitecture but the one time they tried, all the bad things about Intel sabotaged itself. Itanium could have been the modern architecture but they decided to be very closed and kept compiler developers in the dark. This was to give themselves an advantage to sell their own compiler but AMD64 dropped, was easier to adapt to and completely destroyed Itamium. Even after the Itanic sank they insisted their processors were better and never really improved on their microarchitecture but instead bolted on new features. Without seriously considering security, their shortcuts finally caught up with them when the Meltdown flaw was discovered.
TL;DR: Intel played itself and still is.
this has been true for the past 40 years. Intel has never been the "best" processor or the most efficient design. It's only been able to do slight modifications of the existing processors to make them better, not really go into a revolutionary design change. It's just not it's thing. It's thing has been being the cheapest and the only company that can guarantee volume until recently. Also it learned the hard way with Intel iAPX 432 that changing microprocessor designs for established segments doesn't work. There is too much pre-compiled software out there that customers are just not willing to give up.
Also Itanium was never going to work outside a very limited set of applications, it was an HP science experiment gone haywire since the compiler technology wasn't anywhere close to being able to do the optimizations needed to make it at least efficient as RISC or CISC chips at the time. I was honestly surprised it worked as well as it did in the end, but most of the processor design had been outsourced to HP by the end of the project, so that might be the reason.