That's about two CPUs for everyone on earth and likely two more this year.
It's not economies of scale that gives Intel its sustained advantage as much as it is huge margins that allow them to continue re-investing in their fabrication process advantage, which again protects their margins by keeping them on top in the only segments of the CPU market that are both high price, high margin (at east for the top SKUs) and high unit.
A huge part of the cost of a chip is the design. You can get custom fab jobs for under $10,000. But if the design requires you to implement hundreds of op codes, the chip will be nowhere near that cheap.
With simpler specs, a lot of this design cost is reduced. You may not be able to get 11nm chips, but you don't need that to be competitive. You just need to be close enough that your performance hit is not a deal breaker, at a price that's not a deal breaker.
s/smartphones/smarteverything/
Reportedly only 1.5B phones have been sold in 2015, compared to 15B of ARM cores.
There is apparently a huge market of small cheap ARM microcontrollers, to the point that I heard they are sometimes getting cheaper than simple 8bit micros.
ARM chips are cheap not (only) because the R&D is excessively cheap but because the chips are produced in hundreds of millions. Were it not for the explosion of mobile phones, they'd stay in the "nice but expensive for the performance" niche.