Licence Agreement

Arc International PLC
16 October 2001


ARC International announces Internet Machines Corp. to use multiple ARC cores
                          in NPE10 network processor

Elstree, England, 16 October 2001 - ARC International plc (LSE: ARK), a
leading developer of user-customisable, high performance microprocessors and
related intellectual property solutions, has announced that the new NPE10
network processor from Internet Machines Corp. (Agoura Hills, Calif.) contains
multiple ARC microprocessor cores. Internet Machines licensed ARC's technology
in Q4 2000.

The NPE10, that incorporates scores of ARC microprocessor cores, is a fully
programmable, single-chip processing engine capable of delivering wire-speed
packet processing at full-duplex OC-192c (10Gbps) rates. OC-192c is an
extremely fast industry standard (about 10 Gbps) optical-carrier transmission
level for large networks such as the Internet.

Previously announced network processors and systems on a chip from other ARC
customers have used up to 16 ARC cores on a single chip. The NPE10 far exceeds
that level of chip integration. Internet Machines plans to disclose more
details about the NPE10, including the exact number of ARC cores in the
design, shortly before delivering the chip early in 2002.

'We chose the ARC microprocessor core because it was very small and easy to
work with,' said Chris Haywood, vice president of engineering at Internet
Machines. 'It has great performance per gate and is easy to configure and
extend. We liked the auxiliary register space, which provides a direct, fast,
inside-the-pipeline interface to hardware. Close integration with hardware was
the essential requirement. The ARC core is much more open to low-level
hardware interfacing than other configurable processor cores.'

The NPE10 can analyse, prioritise and tag incoming streams of network traffic
while forwarding the packets toward their destinations. It can simultaneously
support multiple types of protocols and services on different subchannels.
Despite its powerful architecture, the NPE10 is easy to use. It has a
straightforward, single-threaded programming model that simplifies design
integration, and programmers can use familiar, off-the-shelf GNU compilers,
assemblers, and other development tools.

Eric Mantion, senior analyst for networking technology at Cahners In-Stat,
said the NPE10 'will be hitting the market at the sweet spot of the curve,
just as the OC-192 NPU market starts climbing rapidly to US $2.8 billion in
2005.'

                                   -ends-

For more information contact:

ARC International plc



Peter Aubusson

Investor Relations Manager

[phone]



Nitin Dahad

Director of Worldwide Communications

[phone]



About ARC International

ARC International plc is a leading developer of user-customisable,
high-performance microprocessor cores, including the ARCtangentTM processor,
and related intellectual property that enables designers to reduce time to
market for their system-on-chip products. More than 50 customers use ARC's
technology, including: Austria Mikro Systeme, BrightCom, Conexant Systems,
Cypress Semiconductor, Fujitsu Microelectronics, IBM, Infineon Technologies,
QLogic, SanDisk, Texas Instruments, and VTech Communications. Products
available based on ARC's technology include digital still cameras, set-top
boxes, and network processors.

MetaWare Inc., Precise Software Technologies Inc., and VAutomation Inc. are
wholly owned subsidiaries of ARC International, providing software development
tools, hardware and software intellectual property and real-time operating
systems for an integrated approach to system-on-chip development. ARC's
third-party partners include Cadence, Flextronics, Intrinsix, Synopsys, TSMC,
UMC, Wind River, and Xilinx.

With headquarters in Elstree, England, ARC International plc and its group
companies employs 230 people in research and development, sales, and marketing
offices across North America, Europe, and Israel. ARC International plc is
listed on the London Stock Exchange (LSE:ARK). The company's web site is at
www.arccores.com.

About Internet Machines

Further information is available on the company's website at
www.internetmachines.com



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.

ARC International (UK) Ltd. and ARC Cores, Inc., both of which are wholly
owned subsidiaries of ARC International plc, trade under the name of ARC
Cores. ARC, the ARC logo, ARCtangent, ARCangel, ARCompact, ARChitect, ARCform,
BlueForm, and CASSEIA are trademarks of ARC International (UK) Ltd. All other
brands or product names are the property of their respective holders.