Leading U.S-Based Semiconductor Company Takes $11M Multiyear License for ARC International's Patented Configurable Solutions

ARC Reaffirms Financial Year 2006 Outlook And Sets Date for Announcement of Preliminary Results

ELSTREE, England, 21 December, 2006 – ARC International (LSE: ARK) today announced that one of the largest U.S.-based semiconductor companies has taken a multiyear license expected to be valued in the region of $11 million (USD) for ARC’s patented multimedia subsystems and configurable processors. The first phase of the contract is guaranteed at more than $5M with over $2M in revenue recognizable for the year ended 31 December, 2006. This tier 1 customer, a first-time licensee, will use its long-term ARC license to create media-based semiconductor chips targeting video- and audio-rich devices.

Carl Schlachte, president and CEO of ARC International, said, “We are very pleased to announce another industry leader has joined ARC’s expanding community of world-class customers. This underscores management’s continued progress toward the strategic goal of growing ARC’s customer base with world-class, tier 1 companies. Industry leaders are increasingly adopting ARC’s patented subsystems and configurable processors as the ‘solution of choice’ for high volume consumer applications. They enable the creation of lower cost, highly differentiated solutions, which are distinct benefits that ‘fixed architecture’ alternatives cannot offer.”

Outlook and Announcement of Preliminary Results for Financial Year 2006
Having secured this important license win, the company remains comfortable with market expectations for the year ending 31 December, 2006. On Wednesday 14 February, 2007 ARC International will announce results for the twelve months ended 31 December, 2006. A morning meeting will be held in London for analysts. Interested parties should contact ARC International for more information.

About ARC International plc
ARC International is the world leader in configurable subsystems and CPU/DSP processors that are used by semiconductor companies worldwide to create system-on-chip (SoC) designs that provide a strategic competitive advantage. ARC's patented configurable products are smaller, consume less power, are less expensive to manufacture, and provide a higher degree of differentiation over what can be created using "fixed architecture" core alternatives.

ARC International maintains a worldwide presence with corporate and research and development offices in California and Elstree, UK. For more information visit www.ARC.com. ARC International is listed on the London Stock Exchange as ARC International plc (LSE: ARK).