They are not competitive at the highest-end but this has never been a goal. Nor does it need to be now. There are bigger fish to fry.
I will simply say that you are wrong on many, many levels. Intel absolutely wants graphics leadership and I know for a fact that they've hired many of the key graphics researchers (the authors of some of the cg books I used back in college).
Intel also is the second largest holder of fundamental patents in graphics (next to NVIDIA). Intel cares very much about graphics and you will see when Cherry Trail rolls out that the big improvement will be in graphics :-)