I'm not personally opposed to Tensilica "dying", especially if it doesn't involve Cadence dying, since they are a (somewhat indirect) competitor from my point of view, but ARM is not a substitute for Tensilica. You can't extend its ISA unless you license the arhictecture for $30M. A DSP like Tensilica's is also much more efficient than ARM on a range of tasks, and in particular, having local memory instead of caches is done for a reason. (The least efficient accelerator of all and the favorite of academics who have easy access to it, GPUs, also have this.)

As to their compiler licensing - that's what happens when you develop for a small niche, you get more expensive tools which are worse than the free ones used by the majority. But it doesn't mean that the thing doesn't have its uses. I hear that a recent chip by AMD had 40 Tensilica (smallish, inaccessible to most software) cores.

The same is true about CEVA (which was mentioned in a sister thread), more or less.