It has been done before, at least according to the article, it appears that there already is competition in this market:
Arizona-headquartered Microchip Technology designs and builds a rival range of 32-bit "Pic" microcontroller, while California-based Atmel offers 32-bit "Avr" products.
But doing a bit of fact-checking, it might not be so simple.
32 bit uCs are nothing new. However PIC32s are large high performance devices with AES, Ethernet, USB etc built in depending on model[1]. They operate in a totally different area. You can use one to run a webserver and drive an LCD panel for example.
Atmel also offer 32 bit uCs in the form of AVR32 and ARM based parts.
The Microchip website gives 404 errors when I try to read their press release http://www.microchip.com/pagehandler/en-us/press-release/mic... - not really a good sign, hard to verify any claims.
The Atmel TinyAVR devices are small (2mmx2mm) but appear only to be 8-bit and aren't really comparable to the Arm offering.