Intel740 was their first discrete GPU
Back in 1998, Intel740 was their first discrete GPU.
As its actual embedded graphics solutions, i740 was plagued with driver bugs.
There is no point to hire the better hardware guys to build it's hardware, if Intel is going to keep it's tradition of supporting its graphic solutions poorly and for short periods, on the driver/software front.
Anyway, I bet Intel is more interested in GPGPU than videogames here.