IMAGINATION TECHNOLOGIES ANNOUNCES EXPANDED MULTIMEDIA COLLABORATION WITH INTEL AND INVESTMENT FROM INTEL CAPITAL

KINGS LANGLEY, UK, Oct. 7, 2006 -- 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 Ł5.28m 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.

About Imagination Technologies

Imagination Technologies Group plc - a leader in SoC IP - develops, licenses and supplies market-leading graphics, video and display cores, real-time multi-threaded DSP/RISC processors and communication and broadcast technologies for the mobile, consumer, automotive and PC markets. It supplies licensable IP (Intellectual Property) supported by advanced development tools to leading semiconductor and consumer electronics companies worldwide. Imagination Technologies Group plc has its corporate headquarters in the United Kingdom and is publicly traded on the London Stock Exchange (FTSE:IMG). See: www.imgtec.com.

About Intel Capital

Intel Capital, Intel's venture capital organization, makes equity investments in innovative technology start-ups and companies worldwide. Intel Capital invests in a broad range of companies offering hardware, software and services targeting enterprise, home, mobility, health, consumer Internet and semiconductor manufacturing. Since 1991, Intel Capital has invested more than US$4 billion in more than 1,000 companies spanning more than 30 countries. During this time, about 160 portfolio companies have been acquired and another 150 have gone public on exchanges around the world. In 2005, Intel Capital invested about US$265 million in about 140 deals with approximately 60 percent of funds invested outside the United States. For more information on Intel Capital and its differentiated advantages, visit www.intelcapital.com.

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