Imagination Technologies Group has reached a new major collaboration agreement with Intel which extends the licensing and deployment of its graphics and video IP cores for use with Intel’s PC, mobile computing and consumer architectures in certain segments. Imagination also announces an investment by Intel Capital, the venture capital arm of Intel. Arvind Sodhani, President of Intel Capital, says: “Intel Capital’s investment recognizes the importance of graphics, video, and display technologies for the PC, mobile computing and consumer markets. This investment together with the ongoing collaboration between Intel and Imagination will expand these capabilities bringing the benefits of enhanced graphics and video to customers around the world.”

Imagination Technologies Group plc (LSE:IMG; "Imagination") – a leader in
System-on-Chip Intellectual Property ("SoC IP") – today announces that it has
reached a new major collaboration agreement with Intel Corporation (“Intel”),
which extends the licensing and deployment of its graphics and video IP cores
for use with Intel’s PC, mobile computing and consumer architectures in certain
segments.

Imagination also announces an investment by Intel Capital, the venture capital
arm of Intel. Intel Capital will invest £5.28m in Imagination, subscribing for
6,000,000 new ordinary shares of Imagination’s share capital (representing 2.9
per cent. of issued share capital prior to such issue) at a price of 88 pence
per share, being the closing price on the London Stock Exchange on Friday 29
September 2006.

Arvind Sodhani, President of Intel Capital, says: "Intel Capital’s investment
recognizes the importance of graphics, video, and display technologies for the
PC, mobile computing and consumer markets. This investment together with the
ongoing collaboration between Intel and Imagination will expand these
capabilities bringing the benefits of enhanced graphics and video to customers
around the world."

Anand Chandrasekher, Sr. Vice President, General Manager Ultra Mobile Group –
Intel, added: “Imagination has a wide range of significant and market-leading
graphics and video IP cores, together with a team of highly respected engineers
with many years experience of embedded multimedia. Intel highly values our
collaboration with Imagination Technologies in the development of
industry-leading multimedia capabilities for future PC and consumer products.”

Hossein Yassaie, CEO, Imagination Technologies says: “Our relationship with
Intel, the world’s largest semiconductor company, has reached a new stage that
will see the companies working together to enable a growing range of Intel
processors with Imagination’s industry-leading graphics and video capabilities.
We are delighted to continue and extend this relationship with Intel for our new
generation of PowerVR graphics and video cores.”

Under the terms of its licensing arrangements Imagination receives license fees
and royalty revenues on SoCs incorporating Imagination’s IP shipped by partners.

Application for the new shares to be admitted to trading on the London Stock
Exchange and the Official List of the UKLA is being made, with listing and
admission of those shares anticipated to be by the end of this week.

About PowerVR Visual IP Cores
PowerVR IP cores for graphics, video and display seamlessly integrate to enable
the design of state-of-the-art system-on-chip (SoC) solutions.

The PowerVR SGX family are Imagination Technologies’ next generation shader-based
graphics and video technology cores. With state-of-the-art support for 2D and 3D
acceleration PowerVR SGX has an industry-leading feature set that exceeds OpenGL
2.0 shader and Microsoft Vertex and Pixel Shader Model 3 requirements. PowerVR
SGX cores also perform video/image decode and encode processing for a wide-range
of standards.

PowerVR video cores support a wide range of compressed video formats including
MPEG-1, MPEG-2, MPEG-4, H.264, WMV, and VC-1 for single and multiple streams
from SD to HDTV formats. PowerVR display cores provide high-quality scaling,
overlay and blending, interlace to progressive video conversion and interlace
output with flicker filtering.