You logic does not make sense; Intel obviously knows that, yet they decided to enter the market anyway, which costs them billions per year.
You have a point, though. If Paul Otellini knew what would happen, Intel was now making tons of money. Now they'll make less because they have to compete with other companies that already participated in a race to the bottom. Qualcomm won and Qualcomm is doing absolutely fine. But that doesn't matter. Intel is losing a billion every quarter. They aren't going to give up now, they are simply going to take Qualcomm's place and become profitable. Once they have the position, who knows, maybe they'll be able to ask higher prices.