If they do cancel ARC it'll be a real shame - bad for competition and consumers, and potentially themselves. Yes it's a short-medium term hit, but that should have been a given when you're developing a highly complicated new product line.
There's a clear opening in the market for "good enough" wallet friendly GPUs in the £150-£300 price bracket, with decent driver updates they could've made this their base market, build a reputation and developed the line from there. 2080 - 3060 Ti / 6600XT - 6700 performance levels would have been acceptable if they could've hit a $299 price point and released by year end....AMD and Nvidia aren't going to give us any sub-$300 entry level gaming GPUs in this price bracket for a good 6 months.