No one will give Intel real money for the advanced fabs, as they are worthless right now. I suspect that's probably the main thing holding Intel back from doing that - they can't get a decent price on the fabs, and just spinning them out directly would probably lead to a fairly immediate failure without Intel's CPU design division funding development without immediate expectation of returns.
If one was a gambling man (with a good helping of pride), you keep the fabs with Intel (where the CPU design division is printing money) and subsidise the fabs and hope they finally stick the landing and start making half-decent chips again.
If they split, it's likely the fab side of the business will need a large infusion of cash in order to catch up (be it in the form of a government bailout or something else), or then they have to accept becoming a second-rate player. For which there is still a large market, so they might actually do decent-ish there. But that pretty much leaves TSMC in a monopoly position.