First, cell phones ate EVERYTHING. So, the only volume is in cell phones. Cell phones only need a few different types of chips but they need them in massive quantities.
Second, the cost of creating a chip is too high. The "maker" culture relies on the fact that creating a PCB is cheap. Between the cost for EDA VLSI tools and the NRE for creating a mask set, you blow $100K before you even get started making a chip. I suspect that we probably have the ability to digitally image 1.0um or larger features so we don't have to cut a mask set, but it's a chicken/egg problem. Since nobody wants 1.0um+ processes anymore, nobody will develop the technology for them, so nobody will design for them, so nobody will want 1.0um+ processes.
Third, modern fab capacity is ridiculous. A single 300mm wafer can produce 70,000 1mm^2 chips or 700 1cm^2 (a big chip nowadays). How many customers can consume those kinds of volumes?
Not sure where your getting this. The MCU market dwarfs the cellular market, last time I looked it was on the order of 25B MCUs sold per year and the majority are still 8bit MCU. There are only ~1B cell phones produced per year. I don't think the discrete market is really all that driven by cell phones.
The Cortex A series cores are around 2mmx2mm. The Cortex M series are something like .2mmx.2mm. It looks like my 10mmx10mm comment was way off.
So, let's assume that the 8-bit MCU's are .1mmx.1mm. That's probably WAY too big, but let's start somewhere. That means that you can fit 7,000,000 on a wafer. For roughly 3,500 wafers for the entire, worldwide capacity of embedded MCU's.
The entire, worldwide, annual market for MCU's is 3,500 silicon wafers per year. That's the same number of wafer starts that a big fab has IN A WEEK.
And that was 2008. http://www.eetimes.com/document.asp?doc_id=1169357
Modern fabs can pump out a million a week: electroiq.com/blog/2014/01/tsmc-samsung-and-micron-top-list-of-ic-industry-capacity-leaders/
This is why everybody wants to produce bigger chips like SOC's and why Intel will never switch to ARM until it's about to go under. If your chip is too small, you can't move enough to fill your fab even if you give them away free.
Usually it doesn't work out too well.
I haven't done the math but it doesn't seem like a great deal or a good plan.
