You can't blame Icahn in this situation. He knows AMD is the only growth play to be made in the MPU sector.
Intel isn't a growth play, it can't really grow any faster than the market segment itself grows and that news is already priced into the stock's forward looked P/E at any given time.
So if you want a stock that has a chance of doubling and doubling and doubling then AMD is at least a chance at that whereas Intel, IBM, and SUN are not such a chance (in a meaningful timeframe).
The other thing Icahn is rather intelligently looking to play here is the "fabless bump". We talked about this at TI for many many years before taking the defining steps towards it. The fabless bump is a phrase the analysts used with us in discussing how the P/E ratio for a fabless company tends to be rewarded with a sizably higher ratio than that of a competing fab-laden business.
QCOM vs. TXN. Its all about how the valuation models the analysts use computes the value/hindrance of equity tied up in depreciation assets versus tied up in investments that appreciate and grow as the company the grows. Stock buybacks tend to become appreciating assets, fabs tend to become depreciating assets, so on.
At any rate what Icahn is doing here make sense from a 50k-ft perspective of wanting to make a sector play and saying to yourself "of all the companies and of all the boundary conditions currently setup for those companies, which one is positioned to have their stock valuation move explosively higher relative to the rest of the sector?".
Knowing (of) Icahn, going long on AMD is simultaneously couple with an nearly equally large position of shorts on INTC. That way if the entire sector continues to contract he's still likely to make more on INTC losses (gains for his shorts) than he loses on further AMD losses (losses on his longs).
What Icahn does is nothing special or unique, he just makes the headlines when he does it because he's doing it with billions whereas the rest of us are doing it with sub-millions.
I find Buffet does things that tend to be unique approaches to investing billions...not many of us can fly to China and peruse the grounds of a steel company and then decide to tell management we are outright buying controlling stock in them (and Icahn never really does that either, he's more the bully type, get a guy on the committee and then beats them up publicly until he gets his way or until he gives up)