ARC International Announces Unaudited Preliminary Results For The Year Ended December 31, 2007

Dollar Revenue Increases 17%; Dollar Royalties Increase 54%; Strategic Acquisitions Position ARC for Continued Growth

SAN JOSE, Calif., and ST. ALBANS, England -- February 20, 2008 - ARC International (LSE: ARK), the world leader in multimedia subsystems and configurable CPU/DSP cores, today announced its unaudited preliminary results for the full year ended December 31, 2007.

Key Highlights:

2007 closed with record highs in backlog and sales pipeline
Net loss without acquisitions decreased 10% to £1.0 million. Net loss with acquisitions increased to £2.5 million
Closing cash and short term investment position remain strong at £21.2 million
Completed and integrated strategic acquisitions

- Alarity, Teja, and Tenison establish ARC's ability to deliver vertically integrated multimedia solutions to high value semiconductor companies
- Sonic Focus adds a new, complementary class of customer and revenue channel through licensing its audio enhancement software directly to OEMs

New first-time royalty contributions; Increase in ARC-Based™ unit shipments

- 6 post 2004 contracts contributed royalty revenues

Total ARC customers now at 144

- 20+ customer contracts announced in 2007
- Intel signs new multi-year, royalty bearing licensing agreement
- Broadcom signed a new ten year licensing agreement
- $15 million agreement with one of the world's largest consumer electronics companies

Commenting on the company's performance, Carl Schlachte, president and chief executive officer, said, "2007 was a year of important achievements and solid growth for ARC International. ARC's revenue growth again outpaced the semiconductor market. Royalties increased to a record high and contracts completed since 2004 began to contribute royalty revenue during the year. Two of the largest customer agreements in the company's history were announced, including Intel, and ARC enters 2008 with record highs in backlog and the sales pipeline.

"Three acquisitions were completed and integrated in 2007, and already are contributing to ARC's ability to build deeper relationships with a greater number of high value semiconductor companies. The additions of Teja, Tenison, and Alarity fill out ARC's technology. Management now is focusing on more vertical solutions and adding new types of customers and revenue channels to leverage the existing business with semiconductor companies. Sonic Focus is the first such acquisition: For the first time in ARC's history the company will derive licensing and royalty fees directly from OEMs, which typically are higher than those obtained from chip firms and creating more demand for ARC-Based products."

Commenting on the financial results, Victor Young, chief financial officer, said, "We were particularly pleased with the strong growth in royalty revenue. While the fourth quarter reflected softness some customers in North America were experiencing as a result of economic conditions, management remains confident about the market prospects for 2008 and the record highs in the sales pipeline and backlog reflect this potential. Contracts that were delayed to 2008 from the fourth quarter are expected to close within the first half of this year. Cost savings have been realized as a result of integrating the acquired companies, and we will look to maximize additional opportunities moving forward."

Financial Tables
Click here to read financial tables

About ARC International

ARC International is the world leader in multimedia subsystems and configurable 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.

ARC International maintains a worldwide presence with corporate and research and development offices in San Jose and Lake Tahoe, Calif., St. Albans, England, and St. Petersburg, Russia. For more information visit www.ARC.com. ARC International is listed on the London Stock Exchange as ARC International plc (LSE: ARK).