The entire story of Altera inside Intel can be summarized as:
Intel fabs make amazing promises about process performance and availability. Altera builds their product stack on that. In the end, the fabs fail to deliver either performance, or sufficient amount of manufacturing capability. Now Altera has to pick which products they want to ship. They obviously can the low end. Even the high end that ships is horribly late, because of manufacturing issues.
There would have been massive demand for the combined Intel+Altera products. Many large customers built their future based on the marketing promises Intel made, and when they couldn't deliver, those customers had to redevelop everything on something else. As an example, look up Nokia Reefshark.