"Strategic alternatives" often means "split up the businesses." Silver Lake proposed something similar to AMD in 2015. In the end, the Silver Lake deal didn't happen [1] and AMD stock is up 45x since then.
[0] https://www.yahoo.com/entertainment/third-point-full-letter-...
[1] https://www.extremetech.com/computing/215353-amd-talks-with-...
Intel's fabrication business needs more volume, so it can increase R&D spending and capital expenditure, it can get this volume as a merchant fab.
Intel's design business doesn't need to be held back by Intel's fabrication delays. I imagine designers at Intel would prefer to compete with AMD on the same playing field--TSMC's latest node.
My understanding is that Silver Lake wanted AMD to split apart its product segments. They were going to buy 20-25% of the company, but the deal never materialized.
Intel's vertical integration is an asset IMO, especially in a supply-constrained environment like the present.
[0]: https://www.eetimes.com/amd-foundry-spinoff-open-for-busines...