ARC International plc Year Ended December 31, 2007 Trading Update

Revenue Increased Over 20% Year-on-Year Record Backlog and Sales Pipeline Royalty Revenue Up Approximately 50%

ST. ALBANS, England, January 9, 2008 – ARC International today announced that its unaudited revenue for the financial year ended December 31, 2007 is expected to be approximately $30 million (£15 million), an increase of over 20 percent on a constant dollar basis compared to financial year 2006.  This takes into consideration the ongoing weakness of the dollar compared to sterling.  In addition, both backlog and sales pipeline at January 1, 2008 are significantly ahead of their positions at January 1, 2007.  Licensing and maintenance revenues have increased, and royalty income for the year as a whole is expected to be approximately 50 percent greater than 2006.

These significant improvements were achieved despite general economic concerns among certain North American customers.  During the second half of 2007 this led to delays affecting the closing of approximately $2.0 million (£1 million) of new licensing contracts.  These are expected to close early in 2008.  Although the impact of these contract delays has been substantially mitigated by good cost management, the EBITDA loss for the year as a whole will be slightly higher than management’s previous expectations due to incremental operating expenses of approximately $3.7 million (£1.9 million) as a result of the three acquisitions completed during 2007.

Carl Schlachte, president and CEO, commented, “2007 was a year of solid achievements for ARC International with significant progress on the two key planks of the company’s strategy.  Firstly, overall revenues grew more than 20 percent, which included increased licensing, maintenance, royalty revenues.  In particular, royalties were up close to 50 percent over 2006 and now represent approximately one-third of total revenues.  In 2007, the company announced the two largest customer agreements in its history, which added to ARC’s backlog and enables the company to begin 2008 with its strongest ever backlog and sales pipeline.

“Secondly, ARC substantially enhanced its product portfolio and technology base by completing and successfully integrating three strategic acquisitions, and adding world-class technological expertise to the management team.  These provide further impetus to ARC’s growth potential, and the achievements in 2007 strengthen ARC’s competitive position and underpin the company’s plans for continued growth.”

Announcement of Preliminary Results for Financial Year 2007

On Wednesday February 20, 2008 ARC International will announce results for the twelve months ended December 31, 2007.  A morning meeting will be held in London for analysts. Interested parties should contact Financial Dynamics or ARC International for more information.

About ARC International plc

ARC International is the world leader in configurable multimedia subsystems and CPU/DSP processors. Used by over 140 companies worldwide, ARC's configurable solutions enable the creation of highly differentiated system-on-chips (SoCs) that ship in hundreds of millions of devices annually. ARC’s patented subsystems and cores are smaller, consume less power, and are less expensive to manufacture than competing products.