AMD's strategy has been to focus on a narrow set of initiatives that they can execute well, rather than extend themselves into a bunch of different well-defended markets (as Intel has done to their detriment). In that regard, AMD developing an "M1" competitor, when they already have class-leading x86 processors, doesn't make sense.

Renoir -- AMD's current-generation mobile and desktop processors -- is already competitive with M1 (although integrated GPU performance is lackluster), and their next-generation Cezanne processors are right around the corner.

On the server side (since that's mentioned elsewhere in this thread), AMD previously released ARM-based Opteron processors, but they were slow and unpopular, and further work on that lineup was cancelled in favor of EPYC. Given that EPYC has single-handedly killed the entire ARM server ecosystem practically overnight (with the survivors being relegated to custom processors for supercomputers and hyperscalers), it's highly unlikely that AMD would revive their ARM efforts for this market.

The only situation where an ARM-based AMD processor would make sense, would be as a custom processor where someone else is footing the R&D and manufacturing bill. The only company that I could potentially see interested in such a thing (and would want an ARM-based processor specifically) is Apple themselves -- they need a high-performance ARM processor for the Mac Pro/iMac Pro, and a Threadripper variant with an ARM ISA might make more sense than developing their own in-house high-performance processor for a low-volume line. But even then, it would be an M1 complement, not a competitor.

Overall, I wouldn't put too much stock in this particular rumor.