Contracting out is not a simple task for CPU Fabs.
It would requie massive amounts of investments from both parties to get those lines up and running.
You can't simply make one type of chip one day and decide to make another the next.
The Path AMD chose was to build a large number of their own FABS to meet demand instead of contracting out.
Now, It would have been cheaper and faster to contract out than build their own fabs but that is not the path they chose.
One very logical reason why many major builders did not go with AMD lines is that AMD had a constant shortage of CPUs. This made introducing an AMD line risky. On top of that, the shortage meant that AMD Chips were not the low price they are today. As we know, most retail shoppers were looking more for price than performance.
That just made Intel the safe choice.
And that is the funny thing.
Today AMD has a chip surplus and is selling them much cheaper but are not inferior.
However, you will find more AMD chips in retail systems than ever before.
This is because the vendors have a guarenteed supply and are likely getting incredible deals from AMD.
Something they could not swing when AMD did not have surplus capacity.