So if they have a chip that performs at the level of a $1100 Intel CPU, why would they give it away?
For Intel, price is just a number.
AMD wants the prices to be as high as possible, to avoid losses.
Intel can lower the prices to put AMD under pressure.
If I look at the Core2 Duo... When it was launched, it was AMD who had $1000 CPUs (FX-series of Athlon64). Intel came out with the E6600, which delivered about the same peformance as the $1000 FX-62, and priced it at $300. So overnight, the chips were devalued to less than a third.
Intel could afford to do that because it wasn't that expensive a chip to make (much smaller than the Pentium 4, which was competing with AMD up to then).
I think Intel is still the one that has the lower operating cost for their octo-core CPUs (their 14 nm process is more mature (as I say, they can even make 22-core/44-thread CPUs), and their CPUs have been on the market for a while, so R&D is already covered to a certain extent). So I don't think AMD can undercut prices. Intel currently sells them at $1100 beacuse they can, not because they have to. They will probably lower the prices to whatever AMD comes up with, and still make a profit.