Doubtful. The real work (and the real money) in these things goes into the design of them, not the actual manufacture. Unless and until the Chinese can design their own chips that run faster and cheaper, they're no threat at all to Intel.
i have worked with the chinese before. your analysis is correct. they can do things cheaper, and what they can do they do well. they are simply limited in what they can do, both technologically and culturally.