I don't think so. Sure, M1 is a big marketing play for Apple, a desktop chip in an iPad that will make basically no difference in terms of use of the extra performance, but will appeal to people that are sold on specs. This is smart from Apple, they know it will push sales and will help the less knowledgeable Apple fans to promote the Air as the better device, no matter what, because of M1.I think the new air will appeal to android tablet users.
I am still using a 2018 iPad Pro. I am not upgrading until I see the next M2 iPad Pro, because I an not willing to give up features like promotion and the better speakers. But for people who don’t need the bells and whistles, there really is no way for android tablet OEMs to compete with an ipad containing a desktop class CPU.
If there wasn’t only an ipad market before, there is only the ipad market now. The only other android tablets you will see in the future are cheap ones used for media consumption.
The real improvement is RAM, which is now on par with Samsung flagships, but those have much less limitations than iPadOS, more storage and same RAM and still plenty of power. And will make no difference to all the people that do not want an Apple device, just like all the Apple fans that would never buy an Android tablet even if it was better in everything than an iPad (and if you go in places other than Apple forums you will see there are a plenty of these people).
In the end however this is beneficial for everyone. Samsung had to step up their game to keep up with iPad, start putting the latest and greatest Android SOC and no the previous years one like they did with the Tab S4, even if Apple is still way ahead, and offer 4 OS upgrades and 5 years of security, compared to only 2 years until a couple of years ago. Now maybe this will push them to try and convince Qualcomm to let them use the more powerful SOCs made for Windows on Arm (currently 8cx gen 3 but in a year Nuvia should be ready), which for now are being kept exclusive for Windows.