That’s a slightly revisionist history. ATI was by no means “circling the drain”, they had a promising new GPU architecture soon to be released, and remember this because I bought ATI stock about 6 months before the merger.

ntel was waiting for ATi to circle the drain a little more before swooping in and buying them cheap, AMD beat them to it.

They had strong iGPU performance, a stronger process node, and tons of cash. There's no reason they couldn't have built something from the ground up, they were absolutely dominating the CPU market. AMD didn't catch up until 2017 or so when they launched the new Zen lineup.

Intel sat on their hands raking in cash for 10+ years before actually getting serious about things, and during that time, Nvidia was wiping the floor w/ AMD. There's absolutely no reason Intel couldn't have taken over the low-end GPU market with a super strong iGPU, and used the same architecture for a mid-range GPU. I bought Intel laptops w/o a dGPU because the iGPU was good enough for light gaming. I stopped once AMD's APUs caught up (bought the 3500U), and I don't see a reason why I'll consider Intel for a laptop.

Intel lost because they sat on their hands. They were late to making an offer on ATI, they were late in building their own GPUs, and they're still late on anything touching AI. They were dominant for well over a decade, but instead of doing R&D on areas near their core competencies (CPUs), they messed around with SSD and other random stuff.