ARM has come out and stated that its Mali GPU will be able to match the power of the Xbox 360 or Playstation 3 within 18 months. They said that Moore's Law was not the only way to achieve this kind of leap in processing power, according to The Inquirer. There is little doubt that this will eventually happen, but in less than 18 months? We have heard this song from ARM before. A quick Google search pulls up results from Slashgear and the Bright Side of News. There is probably more to be found, if one does further searching.
It is not a stretch, however, to say that ARM could turn out a design that packs as much power as the current-gen consoles. In 2010, Microsoft showed off its System on a Chip (SoC) for the Xbox 360. That SoC had a 45 nanometer die, while ARM could easily turn out a chip with a 28 nanometer die. What will make things interesting in the sector is Nvidia. Their current chip is the Tegra 2. The big wait is for the upcoming Kal-El chip that is due in the second half of this year. The race for mobile graphics will really heat up at that point. One has to wonder if ARM can maintain its lead in the mobile graphics sector.