Going with Intel would have been too expensive and would have been a terrible conflict of interest. Intel would gain early access to all their designs and could use it against them with their atom designs. They were avoiding the same situation they were previously in with Samsung. At first Samsung didn't really compete with Apple but things radically changed and using them as a foundry gave Samsung early access to Apple designs. Intel might not really compete with Apple now in mobile but that is surely going to change as Intel improves their low power chips. This also gives Apple the flexibility to consider migrating more platforms to ARM. So sticking with a company that doesn't venture outside of the foundry business is a safe business decision and Apple can use their leverage to speed up the R&D to make them more competitive with Intel (TSMC recently decided to accelerate migrations to 20nm and 16nm, I wonder who pushed that...).