Indeed there are no theoretically perfect free markets. I'm just arguing that Intel is getting away with a lot more than they would if they had competition more like other businesses; as opposed to the current situation where they only have to compete against AMD, and own enough patents between the two of them that it's basically impossible for new competitors to enter the market.

No business needs to earn a profit. By definition profit is surplus to operating costs (and I include a reasonable emergency fund in the category of "operating costs").