ARC International sale of USB Business to Transdimension

July 1, 2004 - The Board of Directors of ARC International plc (LSE: ARK), a world leader in user-customizable processors and development tools for System-on-Chip (SoC) design, and real-time operating systems for embedded control, today announces the sale of its Peripheral Connectivity assets to TransDimension Inc for consideration of £3.6 million. These assets include the ARC USB and Ethernet IP cores, CertiPHY programme and support tools. TransDimension is a leading provider of USB connectivity solutions for embedded applications.

The asset sale is primarily the USB business that is located in Nashua, New Hampshire. At the time of the announcement of ARC's preliminary results in February 2004, the USB business was scheduled to be consolidated into the Elstree, UK facility resulting in the closure of the Nashua site. As a result of today's announcement, the USB business, as well as the related assets and facility, will be sold with the majority of its employees transferring to TransDimension. The total turnover related to this business in 2003 was £2.9 million with an estimated operating loss of £1.3 million. Additionally, the estimated restructuring charge announced in February will be reduced by £0.9 million and is currently expected to be approximately £1.3 million. Proceeds from the sale will be used to fund working capital requirements in the second half of 2004.

This transaction represents significant progress towards the company's goal to reduce its cost structure and drive toward profitability by focussing primarily on processor development. ARC will continue to work with TransDimension as a strategic partner and will resell their USB products when combined with its processor-based solutions.

ARC International will provide further details on the transaction and the overall business at the interim results announcement. Complete results for the six months to June 30th will be issued on July 21st.

Carl Schlachte, Chief Executive of ARC International plc, said:

'We are very pleased to have taken this important step towards delivering on our stated strategy and look forward to maintaining a close partnership with TransDimension. The overall implementation of our strategic redirection is on track and we look forward to reporting on our progress in greater detail at the interim results in July."

About ARC
ARC International is a world leader in low-power, high-performance 32-bit RISC/DSP user-customizable processor cores, real-time operating systems and development tools for embedded system design. ARC's configurable, extendible cores assist customers in their rapid development of next generation wireless, networking and consumer electronics systems, resulting in exceptionally competitive System-on-Chip products.

ARC International maintains a worldwide presence with corporate offices in Elstree, UK and San Jose, California, USA. The Company has research and development offices located in England and the United States. For more information please visit the ARC website at: www.ARC.com. ARC International is listed on the London Stock Exchange as ARC International plc (LSE:ARK).

Statements made in this press release that are not historical facts include forward-looking statements that involve risks and uncertainties. Important factors that could cause actual results to differ from those indicated by such forward-looking statements include, among others, market acceptance of the ARC technology; fluctuations in and unpredictability of the Company's quarterly results; general economic and business conditions; regulatory policies adopted by governmental authorities; assumptions regarding the Company's future business strategy; changes in technology; competition; ability to attract and retain qualified personnel; risks associated with the Company's international operations; and other uncertainties that are discussed in the "Investment Considerations" section of the Company's listing particulars dated 28 September 2000 filed with the United Kingdom Listing Authority and the Registrar of Companies in England and Wales. The Company disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date such statement was first made. In view of the many applications in which its Licensees may use the ARC products, ARC cannot warrant that those applications do not infringe the patents of others. ARC strongly encourages its Licensees to become familiar with the policies governing the use and licensing of intellectual property established by any organization whose standards the Licensee wishes to follow, and to review the list most standards-promulgating organizations publish, of entities that claim to have patents relating to the relevant standards or underlying technology.

ARC, the ARC logo, ARCtangent, ARCangel, ARCompact, ARChitect, ARCform, CASSEIA, High C, High C/C++, SeeCode, MetaDeveloper, MetaWare, Precise Solution, Precise/BlazeNet, Precise/EDS, Precise/MFS, Precise/MQX, Precise/MQXsim, Precise/RTCS, Precise/RTCSsim are trademarks of ARC International. All other brands or product names are the property of their respective holders.

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