1. The cost difference between 14mm2 and 7mm2 is a whole new fab at twice the density (assuming transistor count remains the same). Asset costs really matter to Intel.

2. If the constraint on the number of packages you can sell is the number of chips you can produce, then the packaging cost of the chip is not so relevant (assuming packaging is not a constraint on production). If you can halve the chip area on the same production node, you can double production of packages, which can make a huge difference to profits (assuming Intel is a high margin business with high demand and that demand elasticity is in their favour etcetera).

Disclaimer: I am not in the industry, but what you say just seems wrong without even arguing that the cost of the silicon for Intel dominates packaging costs.