For reference, Intel CPU sales are on the order of 50 million units per year. As a comparison, Apple is selling on the order of 232 million iPhones per year. This is why missing the entire mobile market has hurt Intel, and there's no way the US military is buying more than 232 million of anything other than bullets (and maybe paper products).

The subsidies being paid to Intel and other manufacturers aren't a substitute for volume manufacturing of semiconductors. The more volume you can push through a fab, the more information you can collect and use to understand how to tune the process. Without the kind of volume that TSMC is pushing through its fabs, Intel doesn't have a way of getting the data it needs to tune its fabs. Less data on the process means that it's harder to develop and tune the next generation process. This means that the longer the negative aspects keep feeding into the next iteration, the harder it becomes to pull out of the negative feedback cycle.

Intel needs volume, and if it doesn't find something to run through their fabs in the hundreds of millions of units, then things can only get worse for Intel.