ARM and IBM have been collaborating for 3 years on designing smaller and smaller processors for the industry, improving SoC density, routability, manufacturability, power consumption and performance. Just a year ago, the standard was about 65nm for most ARM Cortex-A8 processors in devices on the market such as the Nexus One. About 6 months ago, 45nm ARM Cortex-A8 processors appeared on the market such as in the ipad/iphone4, galaxy tab/s, droid x/pro. Recent devices with Nvidia Tegra2 are 40nm. The next step for ARM Cortex-A9 dual-core and quad-core processors to appear on the market this year are in designs of 32nm (50% shrink off 45nm node) and 28nm (50% shrink off 40nm node). What's next? They are working on 22nm and 20nm designs for 2012 and have been announcing since ARM Techcon last November that they have 14nm designs for as soon as 2014 that are under work with IBM.
You have to consider, it's not possible to make them smaller than 0nm, there are no minus nanometers. Their achievements in shrinking processor designs are insane. The investments are huge. They have to invest billions of dollars in fundamental research of materials and processes, they have to invent new mathematical tricks. Some of these technologies take 10 years from the lab research to something that can be mass manufactured. To make it feasible, the ARM industry has to collaborate (2).
The reason for wanting smaller process size is to consume less power, to increase performance and to potentially lower cost of devices at the same time (factoring out the increasing cost of R&D for smaller designs through very huge scale).
Watch my video of IBM's Vice President of Semiconductor Research and Development, Dr. Gary Patton, keynoting on how they are getting to 14nm ARM Processor designs and smaller: