It's not just smartphone knock-on, although that does help. The chips in question aren't smartphone class. When I've spoken to people about it, it's more a matter of toolchain, price, and compute power: the tools are familiar (it's just GCC, not something manufacturer-specific), at interesting volumes they're within spitting distance of the others for price, and if it turns out you need more CPU than you originally thought there's usually miles of headroom. The idea of "just go straight to ARM from the start, it's not worth bothering with microcontrollers" is the mantra they go by.

There are still a load of jobs you wouldn't do that for, but the list is short and getting shorter.