Back in May 2008 Intel Germany CEO Hannes Schwaderer confirmed an upcoming, larger, "version of the iPhone" based on Intel's Atom platform. His comments were later retracted by Intel corporate who claimed that Schwaderer’s comments were misinterpreted.
In its carefully-worded apology, Intel implied that Atom wasn't suitable for an Apple product because it cannot yet match ARM’s low-power envelope. (In December 2008 Seth Weintraub noted that the ARM Cortex A8 processor “absolutely kills the Intel Atom in power efficiency.”)
Reader screenworx notes that the apology seemed to be worded so as not to dismiss its disappointment about an unspecified future product.
Since the Atom processor isn't suitable for the iPhone/iPod touch, Intel may have been referring to a larger form factor device, i.e. what we now know as the tablet. One could conclude from Intel's comments that an Apple tablet will not be using an Atom processor but will instead ship with an ARM processor (like the one in the iPhone) – and eventually a new custom ARM chip from PA Semi.