Licence Agreement

Arc International PLC
8 May 2001

          Stream Machine to ship ARC-based digital AV recorder chip

8th May 2001 - ARC International plc (LSE: ARK), a leading designer and
developer of customisable, high-performance microprocessors, and Stream
Machine (San Jose, Calif.) announced today that Stream Machine's new SM2288
MPEG-2 audio/video codec chip uses ARC's configurable microprocessor core. The
SM2288 is designed to drive down the cost of the next generation of digital
audio/video recorders and players. Typical products include home DVD players
and recorders, personal digital-video recorders, video CD players, cable/
satellite set-top boxes, digital TVs, PC digital-video peripherals, and other
advanced consumer products.

The SM2288 codec goes beyond the capabilities of earlier chips by offering
both audio and video real-time encoding and decoding in a single highly
integrated device. It supports the MPEG-1 and MPEG-2 digital-video standards
as well as Dolby Digital and the MPEG digital-audio standards. It enables
high-quality video recording in real time over a wide range of bit rates for
different consumer applications. For example, it can compress a video stream
for high-quality DVD recording at bit rates up to 15 Mbps, or conserve storage
and bandwidth at bit rates down to 2 Mbps for personal video recorders and
video streaming over home networks.

Stream Machine chose ARC's technology because of its versatile RISC
capabilities and configurable architecture. ARC's core is a 32-bit
synthesizable microprocessor that allows developers to customize the
architecture with application-specific instructions and other features. In the
SM2288, ARC's core performs overall system control and the mux and demux
functions. Stream Machine plans to release the SM2288 for volume production
beginning this quarter.

'Stream Machine selected the ARC core because of its small size, computing
power and the availability of software-development tools, such as compilers
and operating systems,' said Brian Heuckroth, vice president of marketing at
Stream Machine. 'ARC provided a soft core that gave us the necessary design
flexibility to make our 0.18-micron chip the market leader.'

'We're delighted that Stream Machine chose the ARC microprocessor core for its
newest audio/video codec chip,' said Jim Turley, senior vice president for
technology strategy at ARC International. 'Stream Machine's choice of ARC's
microprocessor for such a powerful device demonstrates that our configurable
microprocessor core may be used in a broad range of embedded applications,
including some very demanding applications.'

For more information, contact:

ARC International plc:

Media:

Nitin Dahad

Director of Worldwide Communications

+ 44 (0) 20 8236 2835



Investors:

Peter Aubusson

Investor Relations Manager

[phone]



About ARC International

ARC International plc, is a leading designer and developer of customisable,
high-performance microprocessor cores and related intellectual property
technology for telecommunications, voice and data networking, and consumer
electronics embedded systems. ARC's TangentTM processor is an application
specific processor (ASP) which can be customised for use in a wide variety of
increasingly sophisticated products. The innovative configurability of the
processor enables ARC to license its technology directly to original equipment
manufacturers (OEMs) as well as to semi-conductor merchant vendors. ARC's
technology enables designers to reduce time to market and to work with the
semiconductor manufacturers and technologies of their choice.

ARC's licensees include: Austria Mikro Systeme, BrightCom, Chameleon Systems,
Conexant, Fujitsu Microelectronics, Hyperchip, IBM, Infineon Technologies,
SanDisk, Texas Instruments, Vtech Communications and Xemics.

With headquarters in Elstree, England, ARC International plc and its group
companies employ 280 people in research and development, sales, and marketing
offices across North America and Europe. 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 offering multiple
integrated products for system on a chip development.

ARC International plc is listed on the London Stock Exchange (LSE:ARK). The
company's website is located at www.arccores.com

About Stream Machine

Stream Machine is at the heart of digital home entertainment, providing
cost-effective semiconductor solutions that enable industry-leading video and
audio compression. Stream Machine's proprietary compression technology offers
the highest quality video at the lowest possible bit-rates and is compatible
with all the important consumer standards, including MPEG-2, MP3, and Dolby
Digital. Stream Machine's high level of integration provides the low system
cost necessary to bring top-quality digital video and audio entertainment to
consumers at a price they can't resist.

The company's website is located at www.streammachine.com.

For more information, please phone [phone] (USA) or 86-10-6499-3509/3510
(Beijing, China) or contact: Brian Heuckroth, Vice President of Marketing,
Stream Machine 408.435.7113, [e-mail]

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 Cores is a trademark of ARC International (UK) Limited.

All other brands or product names are the property of their respective
holders.