There's room that they can undercut Intel a little bit, but not majorly, and still get sales. You have to remember that without the IGP this is going to be a niche product so you're only talking a small segment albeit a growing one. Plus there's likely to be some pent up demand for anything AMD, so you can 'soak' the early adopters then adjust prices downward later.
The other factor is that availability is likely to be still a couple months, esp with anything other than the top bin. Kaby Lake is available now.