IBM failed to leverage their silicon designs for driving down their cloud costs. As long as the IBM cloud runs mostly on third-party hardware they have no sustainable competitive advantage.
I suppose a z15 LinuxONE cloud offering would be attractive for them to offer because of all the built in observability, and also because those cores can be ridiculously oversubscribed before anyone notices.
As for pricing, they wouldn't need to pay their margins unless they eat into their other segments.
Full vertical integration isn't necessarily good business. Even Apple doesn't do its own manufacturing.