The Tech Report has written a nice intro to all things ARM, you can read it over here if you'd like to learn more about how this small Cambridge-based chip designer took over the mobile chip market.
More intriguing is a third option, known as an architecture license. This type of license allows a third-party firm to design its own processor core that is compatible with ARM's instruction set architecture, or ISA. This setup is akin to the agreement that Intel has with AMD, allowing AMD to make x86-compatible CPUs. The difference is that ARM offers ISA licenses openly, and they have become relatively popular in recent years. Some of the most prominent CPU cores shipping in today's phone and tablets are the fruit of ISA licenses, including Qualcomm's Krait and Apple's Swift. With this option on the table, CPU performance in ARM's key markets can advance even when ARM itself isn't as quick as it should be in producing a new CPU architecture. In fact, that's arguably just what happened in the latest generation of smartphones.