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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Form 10-K

Commission file number 000-31089

Virage Logic Corporation

47100 Bayside Parkway, Fremont, California 94538

Registrants’ telephone number, including area code: (510) 360-8000

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

      Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes þ          No o

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     o

      Indicate by a check whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).     Yes þ          No o

      Aggregate market value of the registrant’s common stock held by non-affiliates of the Registrant as of November 30, 2004 was approximately $125 million based upon the closing price reported for such date on the Nasdaq National Market. For purposes of this disclosure, shares of common stock held by persons who hold more than 5% of the outstanding shares of common stock and shares held by officers and directors of the Registrant have been excluded because such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

      The number of shares of the registrant’s Common Stock outstanding as of November 30, 2004 was 21,836,587.

Documents incorporated by reference

      Portions of the registrant’s proxy statement for its 2005 Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K.

VIRAGE LOGIC CORPORATION

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PART I

      With the exception of statements of historical fact, all statements made in this Form 10-K, including in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7, are forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements relating to strategy, products, customers, business prospects and relationships, trends and effects of acquisitions. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “potential,” or “continue,” the negative of these terms or other comparable terminology. Forward-looking statements are subject to a number of known and unknown risks and uncertainties which might cause actual results to differ materially from those expressed or implied by such statements. These risks include ability to forecast our business, including our revenue, income and order flow outlook, our ability to execute on our strategy of being a leading provider of semiconductor IP platforms, our ability to continue to develop new products and maintain and develop new relationships with third-party foundries and integrated device manufacturers, our ability to overcome the challenges associated with establishing licensing relationships with semiconductor companies, our ability to obtain royalty revenues from customers in addition to license fees, our ability to receive accurate information necessary for calculation of royalty revenues and to collect royalty revenues from customers, business and economic conditions generally and in the semiconductor industry in particular, pace of adoption of new technologies by our customers, competition in the market for semiconductor IP platform, and other risks and uncertainties including those set forth below under “Risk Factors”. These forward-looking statements speak only as of the date hereof; we expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein. The following discussion of our financial condition and results of operations should be read together with the consolidated financial statements and the notes thereto included elsewhere in this filing.

General

      Virage Logic Corporation provides semiconductor intellectual property (semiconductor IP) platforms based on memory, logic and I/Os (input/output interface components) that are silicon proven and production ready. These various forms of intellectual property (IP) are utilized by our customers to design and manufacture system-on-a-chip (SoC) integrated circuits that increasingly are forming the foundation of today’s consumer, communications and networking, handheld and portable, computer and graphics, and automotive applications. Our semiconductor IP offering consists of (1) embedded memories, (2) compilers that allow chip designers to configure our memories into different sizes and shapes on a single silicon chip, (3) memory test processor and fuse box components for embedded test and repair of defective memory cells, (4) software development tools that can be used to build memory compilers, (5) logic elements, and (6) I/ Os. We also provide custom design services to the semiconductor industry.

      Historically, we were primarily engaged in the development and marketing of embedded memory products. After the acquisition of In-Chip Systems, Inc. in May 2002, we expanded our product offering to also include logic and I/ O products, and have been marketing these components as a semiconductor IP platform for our customers’ SoC designs. The expanded product offering positions us to become even more attractive to our customers’ semiconductor design efforts by providing IP across a broad spectrum of the functional elements of the chip.

      Our customers include leading fabless semiconductor companies such as Altera, AMCC, ATI Technologies, Broadcom, PMC-Sierra, Sandisk, TranSwitch, and Vitesse Semiconductor, as well as leading integrated device manufacturers (IDMs) such as Agere, Agilent, AMI Semiconductor, Conexant, Freescale, IBM, Infineon, Intel, Kawasaki, LSI Logic, NEC, Philips Electronics, Sharp, Sony, STMicroelectronics and Toshiba. Finally, we have strategic commercial relationships with semiconductor foundries such as Taiwan Semiconductor Manufacturing Company (TSMC), United Microelectronics Company (UMC), Chartered Semiconductor Manufacturing (Chartered), DongbuAnam, IBM, SilTerra Malaysia Sdn. Dhd. (SilTerra), Silicon Manufacturing International Corporation (SMIC), and Tower Semiconductor, Ltd. (Tower).

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      We develop our embedded memory, logic and I/ O elements to comply with the manufacturing processes used to create the silicon chips for our customers’ products. For our IDM customers, we develop our products to comply with the processes used by their internal manufacturing facilities. For our fabless semiconductor customers, we develop our products to comply with the processes of the third-party semiconductor manufacturing facilities, or foundries, which these companies rely on to manufacture the silicon chips for their products. We also pre-test our products before their release to the market by having actual chips containing our semiconductor IP produced by third-party foundries, so that we can provide our customers with test data and assurance that chips produced using our semiconductor IP will be manufacturable, while producing improved silicon wafer yields. Our products are certified for production by several of the leading third-party foundries used by fabless semiconductor companies. These include TSMC, UMC, Chartered, SilTerra, SMIC, and Tower. Because we ensure our products are silicon proven and production ready, our customers benefit from shorter design times for new product development and reduced design and manufacturing costs.

Corporate Information

      We incorporated in California on November 27, 1995. We reincorporated in Delaware on July 25, 2000. Our principal executive offices are located at 47100 Bayside Parkway, Fremont, California 94538. Our telephone number is (510) 360-8000. Our website address is www.viragelogic.com. Information on our website, and websites linked to it, is not intended to be part of this report.

Industry Background

      The proliferation of wireless products, the growth of the Internet, and the development of higher-speed computers and more robust visual communication systems are creating demand for electronic devices that offer lower power consumption and higher performance in order to achieve lower system operating power and faster processing capability. The designers of these products are seeking technologies that will enable them to decrease the size, reduce the manufacturing costs and enhance the performance of their products. In response to this demand, semiconductor companies have developed technologies that permit entire electronic systems, including the microprocessor, communications, logic, graphics and memory elements, to be contained on a single silicon chip, called SoC, rather than on a circuit board.

      Successful SoC design depends upon the reliable integration of the various components of the chip. Each component must comply with the manufacturing standards of the manufacturing facility that will produce the chip. Since different technical expertise and IP is required for each component of a SoC, it is difficult for many companies to internally develop the various IP needed for these components. In addition, the designers of products that use SoCs are facing increased market pressure to rapidly introduce new products, which shortens the time available for research and development involved in the design of a SoC. In order to accommodate the continuously increasing technical expertise required for the design of a SoC and the time constraints involved in such design, many semiconductor companies are increasingly relying on external sources for the technical expertise and IP for various components of their SoC designs. The use of proven third-party IP components allows semiconductor companies to meet market pressures while continuing to focus on the components of the SoC that constitute their core competencies.

      The demand for high-performance computing and communications applications and the availability of increased bandwidth for Internet applications has made memory an increasingly critical element of the overall operation of SoCs used for these applications. Historically, integrated circuit designs were dominated by the logic function, while memory storage was usually provided in external devices. However, the market demand for increased system operating speed has driven the memory storage elements to be coupled with the logic inside the same silicon chip, resulting in faster and more power efficient products. This trend of embedded memory also resulted in the requirement for more customized memory elements. The need for this proximity, as well as advances in semiconductor technology and the ability to customize the size and configuration of memory functions within a SoC, is creating increased demand for embedded memory. It is now common for a SoC to contain many memories with different functions configured in different sizes and shapes to optimize the area and functionality of the chip. The Semiconductor Industry Association (SIA) forecasts that the

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      Semiconductor companies face significant challenges in designing high-performance memories that can be easily integrated with other components, including logic, for their SoC devices. Due to continuing advancements in the semiconductor manufacturing lithography processes, new circuit design elements have generally been required every one to two years. The internal design teams of semiconductor companies typically lack the dedicated resources necessary to keep pace with rapidly evolving memory designs. Suppliers of stand-alone memories for personal computers and other devices that include memory as a separate element on a circuit board often lack sufficient design expertise and software tools to provide custom high-performance memory for SoC designs. Similarly, suppliers of stand-alone logic and I/ O components generally lack the focus and expertise necessary to develop embedded logic and I/O elements for SoC designs. These factors have created a market need for third-party providers of highly reliable, high-performance memory, logic and I/ O IP for SoC design.

The Virage Logic Solution

      We provide IP for high-performance embedded memory, logic and I/ O elements used in SoC designs, as well as software development tools and custom design services. We offer our customers embedded memory, logic and I/ O elements that are optimized for area, low power consumption and speed and that are available for the manufacturing processes of both the leading and emerging third-party semiconductor foundries. Key benefits of our solution include:

	•	Memory Design Expertise. Our memory design expertise allows us to provide our customers with leading-edge memory technologies for advanced manufacturing processes. We have assembled a global team of over 80 engineers focused exclusively on memory design. This team includes senior level engineers with significant expertise in various types of memory design, including SRAM, DRAM, Flash and EPROM.
	•	Logic Design Expertise. Our historical design expertise in carefully integrating large amounts of memory with advanced logic designs allows us to provide our customers with logic technologies for advanced manufacturing processes. We currently have a design team of over 25 engineers focused exclusively on logic design.
	•	Broad Product Line. We offer multiple types of memories, memory compilers, logic libraries and I/Os for advanced 0.25 micron, 0.18 micron, 0.15 micron, 0.13 micron and 90-nanometer processes. Our compilers allow our customers to generate the exact configuration of embedded memory needed for their SoC designs. The increasingly smaller process geometries offer the designers the opportunity for greater chip functionality as well as lower cost chips.
	•	Manufacturing-Tested Solutions. Many of our embedded memories are customized, verified and tested for a particular manufacturing process on a silicon chip, commonly referred to as silicon proven, before being delivered to a customer. This verification substantially reduces the risk that the memory element will be incompatible with the host manufacturing process and thereby reduces costly development delays which our customers might experience from using in-house or other third-party designs that are not silicon proven. Our memories have been purchased by over 250 customers and by foundries that comprise a significant portion of the third-party foundry market.
	•	Significant Design-Time Advantages. We offer silicon proven memories, logic and I/ O components that comply with the standards for specific manufacturing processes. Our memories, logic and I/O components and software tools can be easily integrated into our customers’ SoC design processes. By eliminating the need to design specific embedded memories, logic and I/O components, our customers can shorten the design time for their SoC.
	•	High-Density, High-Performance and Ultra-Low Power Consumption Embedded Memories. We have continued to expand our Area, Speed and Power (ASAP) MemoryTM compiler offering to enable the generation of high-density, high-speed and ultra-low power consumption embedded memories in

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		multiple configurations. These technologies have been developed using custom memory design techniques to achieve industry-leading results in area, speed and power consumption.
	•	High-Density and Ultra- High-Density ASAP Logic Libraries. We offer an innovative and patented approach to routing and cell architecture for standard cell libraries that consistently yields smaller designs and higher routing utilization without sacrificing performance. We also provide patented metal programmable libraries that offer the flexibility to easily and quickly modify SoC designs while minimizing mask costs associated with frequent design changes.
	•	I/O Libraries. We offer highly differentiated base I/O libraries that result in smaller overall die sizes and provide an architecture that can accommodate specialty I/Os from providers of specialty I/O cells.
	•	Redundancy, Embedded Test and Repair. Our Self-Test and Repair (STAR) Memory SystemTM, an embedded memory product that allows design engineers to economically embed multiple megabits of SRAM into a SoC, includes an integrated test and repair capability that enables our customers to achieve higher yields of semiconductors. The system includes one or more STAR SRAM memory blocks, a STAR Processor and a STAR Fuse Box. The STAR SRAM comes with redundant locations, the STAR Processor decides how to test and repair defective SRAMs and the STAR Fuse Box stores the repair information. We believe these potentially higher yields will provide our customers significant cost savings in recovered silicon and other raw materials, thereby substantially reducing test costs and enabling faster time-to-volume.
	•	Ease of Integration. We provide a complete set of software development tools to facilitate the integration of our memories, logic and I/Os with the other elements of a SoC design.

The Virage Logic Strategy

      Our objective is to be the leading supplier of semiconductor IP platforms based on memory, logic and I/Os. We believe our customers will then choose to include an increasing amount of Virage Logic semiconductor IP when designing and manufacturing their complex SoCs. Key elements of our strategy include the following:

	•	Position Virage Logic as a Leading Provider of Semiconductor IP Platforms. We have been known historically for our expertise in providing numerous embedded memory solutions for a variety of advanced products utilizing sophisticated SoC technologies. Our memory solutions have enabled designers to choose from a broad suite of memory products based on their requirements for area, speed, power consumption, redundancy and other technical parameters. With the addition of logic and I/O products to our semiconductor IP platforms, our goal is to position Virage Logic to capture additional “real estate” on the chip, while enabling our customers to choose highly integrated, high-performance, memory, logic and I/O solutions from our product portfolio, based on their unique design requirements. We believe this will position us to pursue larger market opportunities, while further entrenching our existing position as a leading provider of embedded memories.
	•	Enable the Manufacturing of Semiconductors Using Our Semiconductor IP at Leading Third-Party Semiconductor Foundries. We work with leading third-party foundries to qualify our semiconductor IP for high-volume production in their manufacturing processes. In this manner, we are in a position to provide embedded memories, logic and I/O elements, as well as compilers that are silicon proven for a specific foundry’s manufacturing process, directly to that foundry’s entire customer base. Our close associations with these foundries also give us early access to information for advanced processes thereby enabling us to be among the first to market products on smaller process geometries.
	•	Become a Preferred IP Supplier to the Leading Fabless Semiconductor Companies. Fabless semiconductor companies, or semiconductor companies that do not internally manufacture their own silicon chips, spend substantial sums of money purchasing memory, logic and I/O elements to incorporate in their chips. These elements may be outside of their core competencies, or subject them to time-to-market constraints. As a result, they license IP from providers of semiconductor IP like us. To date, we have licensed our IP to many leading fabless semiconductor companies including Altera, AMCC, ATI

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		Technologies, Broadcom, Ericsson, PMC-Sierra, Sandisk, TranSwitch and Vitesse Semiconductor. We intend to continue to target those fabless semiconductor companies that produce the largest number of chips, which will enable us to increase the royalty revenue payments we receive based on levels of production from the foundries that manufacture chips for our fabless customers.
	•	Increase our Base of Integrated Device Manufacturer Customers. Integrated device manufacturers (IDMs) produce the largest number of integrated circuits and face significant cost and product differentiation challenges. The internal design teams of these companies are facing difficulties keeping pace with the increasing demand for, and proliferation of, embedded memory and logic technologies and the rapid innovation of these technologies and integration with other SoC components for advanced manufacturing processes. To date, we have licensed our IP to many leading IDMs including Agere, Agilent, AMI Semiconductor, Conexant, Freescale, IBM, Infineon, Intel, Kawasaki, LSI Logic, NEC, Philips Electronics, Sharp, Sony, STMicroelectronics and Toshiba. In addition, several IDMs are aligning their internal design flows with leading third party foundries and outsourcing semiconductor IP for SoCs to be produced at both the third-party foundries and their own internal foundries. These types of relationships will broaden our market for silicon proven standard products which are designed to qualify for production at the leading third-party foundries. We intend to build upon our ability to reduce these customers’ design time and costs in order to attract additional IDM customers.
	•	Continue to Provide Existing Products for Advanced Manufacturing Processes. As the semiconductor manufacturers develop advanced manufacturing processes that enable increasing density and speed as well as lower power consumption, we intend to lead the market for semiconductor IP components. We have assembled a team of over 200 engineers and we believe this will allow us to be the first to market with semiconductor IP platforms for advanced manufacturing processes, which will enable us to gain market share among early adopters of advanced processes.
	•	Continue to Solve Manufacturing and Yield Issues Facing Designers of Complex SoCs that Employ Multi-Megabit Embedded Memory Cells. We introduced one of the industry’s first embedded memory product that allows design engineers to economically embed multiple megabits of SRAM into a SoC. The integrated test and repair capability ensures higher yields of semiconductors and can potentially save millions of dollars in recovering chips that historically would have been rendered unrepairable, or repairable at significant cost. This capability also substantially reduces test costs and enables faster time-to-volume production. Embedded memory test and repair can take place either in the factory during the wafer probe process or in the field while the SoC is used in the end product, thereby enhancing the overall reliability of the product.
	•	Expand our Research and Development Efforts. We are focusing on developing new memory and logic architectures to support the convergence between computers, consumer products and communications markets. We intend to continue working with our foundry partners, TSMC, UMC, Chartered, DongbuAnam, IBM, SilTerra, SMIC and Tower, to define the focus of our research and development activities to best address the changing needs of our customers.
	•	Expand Distribution Channels. We intend to expand our existing distribution channels by continuing to selectively hire direct sales force members to serve key markets worldwide. In November 2002, we established a sales subsidiary in Japan. In other parts of Asia, we also continue to distribute our products through well- established independent distributors. We also intend to continue developing partnerships with value-added-resellers and other distributors of IP through our Virage Logic Intellectual Property Partner Program (VIP) to leverage their extensive U.S. and international sales organizations.

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Our Products

      We offer a wide range of semiconductor IP including:

	•	embedded memory, logic and I/ O elements;
	•	memory test processor and fuse box components for embedded test and repair of defective memory cells;
	•	software development tools that can be used to build memory compilers.

      Our Embedded Memory Semiconductor IP. We provide embedded memory semiconductor IP in predetermined shapes, sizes and types that can be incorporated by semiconductor designers into their SoC designs. We deliver our memory semiconductor IP to our customers through downloads from secure servers or on computer disks in a form that can be integrated directly into the design of the SoC.

      Our Embedded Memory Compilers. A compiler is a software program that allows semiconductor designers to configure memories to the desired specifications for their SoC designs. Our compiler products include:

	•	STAR Memory System. The system allows the designer to embed multiple megabits of SRAM into a SoC economically without sacrificing yield and manufacturability. The system includes one or more SRAM blocks, a STAR Processor and a STAR Fuse Box. These memories are optimized for area, speed or power, incorporate self-test and repair capabilities and can generate up to eight megabits of embedded memory.
	•	ASAP Memory. These compilers are optimized for high-density, high-performance and low-power consumption and can generate memories up to 512 kilobits in size. The ASAP Memory product line is available in many different memory types including single- or dual-port register file, single- or dual-port SRAM, synchronous or asynchronous SRAM and ROM.
	•	NetCAM®. Our content-addressable memory, or CAM, compilers can be used in SoCs that are used in routers, switches and other high-bandwidth Internet infrastructure equipment to accelerate hardware-based searches. These high-speed ternary and binary CAMs are key enablers in moving high speed traffic through a network.
	•	NOVeA®. This innovative non-volatile electrically alterable embedded memory can be manufactured using standard logic processes. NOVeA can retain its data at power-off while allowing data to be reprogrammed and erased during normal operation. NOVeA provides on-chip storage of calibration data, passwords, critical access information, etc. It also helps the designer reduce overall system size, achieve lower power operation and increase system performance.

      Our Logic Semiconductor IP. We provide logic libraries through our ASAP Logic^TM product line. These products are designed to improve logic block area utilization and SoC performance while decreasing the price and power consumption of the overall chip. We deliver our logic semiconductor IP to our customers through the same manner as our embedded memory semiconductor IP.

	•	ASAP Logic High-Speed Metal Programmable Cell Library. This cell library provides high mask cost savings during SoC design revision since only two to five mask layers need to be changed to reconfigure the chip.
	•	ASAP Logic High-Density Standard Cell Library. The cell architecture used in this cell library provides significantly increased pin accessibility, which along with other features, results in logic block area savings. This equates to an overall reduction in chip size and lower fabrication costs.

      Our Base I/ O Library. In 2003, we added an input/output (I/ O) library to our product portfolio. It contains all necessary elements to complete an I/ O ring, a key element for the SoC’s communication with external electrical components.

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      Our Software Development Tools. Our primary software development tool is Embed-It!® Architect, which allows semiconductor design companies to develop their own compilers with re-characterization capabilities. We also provide a software tool called Embed-It! Integrator to facilitate the design of multiple memory configurations used with SoCs.

      During fiscal year 2004, license revenues for 0.18 micron technology accounted for 16% of total license revenues, license revenues for 0.13 micron technology was 47% of total license revenues, license revenues for 90-nanometer technology was 32% of total license revenues and license revenues from the sale of other products was 5% of total license revenues. Included within the 5%, other products category, are our products on the larger process nodes, 0.25 and 0.35 micron technology. We expect royalty revenue from these products to be declining and license revenue to be insignificant in future periods. In fiscal year 2003, revenues from these product technologies were broken down as 21% for 0.18 micron technology, 53% for 0.13 micron technology, 7% for 90-nanometer technology and 19% for other products. In fiscal year 2002, revenues from these product technologies were broken down as 22% from 0.18 micron technology, 56% from 0.13 micron technology, 12% for 90-nanometer technology and 10% for other products.

Markets and Applications

      We target markets and companies that utilize SoC technologies with high-performance, low-power architectures and high-density requirements where we believe our silicon proven, semiconductor IP platforms provide customers with significant time-to-market, design and manufacturing cost advantages. Examples of the markets and applications in which our IP is implemented include:

	•	Consumer Products. Digital appliances increasingly require more functionality, Internet connectivity and low-power consumption. Our memories can be found in video game players, mobile phones, pagers, PDAs, digital cameras, high-definition televisions, cable set-top boxes and DVD players.
	•	Communications and Internet Infrastructure. Communications SoCs are used throughout the Internet, including in routers, switches, DSL modems, gigabit ethernet equipment and high-bandwidth set-top boxes.
	•	Computers. Computation equipment such as personal computers, workstations and servers require more complex chip sets and embedded memory to achieve new features such as advanced 3D graphics and digital signal processing, or DSP.

Research and Development

      We believe that our future success will depend in large part on our ability to continue developing new products and expanding our existing products for advanced manufacturing processes. To this end, we have assembled a team of engineers with significant experience in the design and development of embedded memory and logic semiconductor IP. Currently, we are focusing our research and development efforts on development of different configurations for memories, logic and I/ O platforms that support the latest manufacturing processes: 90-nanometer and 65-nanometer. We are also developing new memory and logic architectures to support the emerging communications markets and the convergence between these markets and the computer and consumer products markets.

      We have entered into agreements with TSMC, UMC, Chartered, DongbuAnam, IBM, SilTerra, SMIC and Tower for the development and licensing of various semiconductor IP platform products for certain design rules of each of these foundry’s design rules. Our relationship with these foundries assists us to develop the focus of our research and development activities. Under such agreements, each party owns its own IP and the parties to each agreement jointly own any intellectual property co-developed under such agreements. Following development, we license the developed technologies to third-parties that manufacture their silicon chips at the foundry. In exchange for our development, the foundries pay us licensing fees, as well as royalties based on silicon chips manufactured at the foundry using our semiconductor IP. In addition, both parties agree to provide technical, marketing and sales support as appropriate.

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      At November 30, 2004, we had 271 employees engaged in the engineering related activities of research, development and operations. We expect to identify and hire additional technical personnel in fiscal year 2005 to staff our planned research and development activities, and we expect that these costs will increase in the future in order to maintain a leading position as a third-party provider of silicon infrastructure in the form of semiconductor IP.

Sales and Marketing

      We focus our sales efforts through direct sales in North America, Europe and Asia. In Asia, we also derive indirect sales through distributors.

      Direct Sales. We maintain a network of direct sales representatives and field application engineers serving the United States, Asia, Canada and Europe. Substantially all of our direct sales representatives and field application engineers are located in North America, Europe and Japan and serve our customers in those regions. The sales force is distributed throughout North America with employees in the following locations: Austin, Boston, Fremont, Los Angeles, Newark, West Palm Beach and Ottawa. To serve our European customers, we have a direct sales organization based in the United Kingdom with additional sales personnel in Germany and Israel. In 2003, we also added direct sales personnel for Japan. Our sales force’s primary responsibility is to secure and maintain direct account relationships with fabless semiconductor companies and integrated device manufacturers for the license of our products. Developing a licensee relationship typically involves a three to six month sales cycle and can extend beyond this timeframe. In the past two years, we have sold our products to more than 250 customers.

      We enter into license agreements with our customers for a range of embedded memory, logic and I/ O technologies. For our ASAP Memory, ASAP Logic and I/ O products, in addition to collecting license and consulting fees from the customers, we receive royalties from third-party foundries that manufacture chips for our fabless customers. For our STAR Memory System, NetCAM and NOVeA products, we receive both license and royalty fees directly from our customers, as well as royalties from the third-party foundries that manufacture their chips. Our license agreements contain limited warranties and limit our liability for consequential damages arising from indemnification of IP infringement.

      We have developed relationships through the Virage Logic IP (VIP) Partner Program with the following types of companies that provide us with customer referrals.

	•	Foundries. We have entered into marketing and technology relationships with several third-party foundries, including TSMC, UMC, Chartered, DongbuAnam, IBM, SilTerra, SMIC and Tower. These relationships provide us with early access to new process technologies and endorsements from their direct sales force to our mutual customer base.
	•	EDA Vendors. We have entered into joint marketing relationships with a number of electronic design automation, or EDA vendors, including Cadence Design Systems, Magma, Mentor Graphics and Synopsys. These relationships allow us to validate our interoperability with these EDA vendors’ software design tools.
	•	Design Services. We have developed technology alliances with several design service companies who have experience with Virage Logic semiconductor IP. This allows our customers to augment their design teams or outsource their chip designs to these design service companies.
	•	IP Providers. We have established joint marketing relationships with numerous IP providers including Denali, MIPS, QualCore, and Tensilica. By working in partnership with other leading IP suppliers to test silicon and provide reference designs, we help customers access the functionality of the IP prior to committing it to their design.

      Indirect Sales. In addition to the direct sales force, we also sell our technologies through a distributor in Japan and a distributor for the rest of Asia, primarily in Taiwan. These indirect sales organizations have expertise in selling semiconductor IP and software design tools. None of these relationships is exclusive.

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Customers

      Our customers are semiconductor companies that use our semiconductor IP platforms to design complex SoCs. Purchasers of our embedded memory, logic and I/ O elements include fabless semiconductor companies, IDMs and third-party foundries. For fabless semiconductor customers, we license our semiconductor IP on either a single or multiple project basis. For IDMs, we license our semiconductor IP on a multiple project basis and offer our Embed-It! Architect software as an option to develop and maintain their memory IP on the same software platform.

      The following chart provides a representative list of our major customers by customer type.

*	Indicates the ten customers that generated the highest level of revenues for us in fiscal 2004.

      We expect a small number of companies to collectively represent between 20% and 40% of our revenues for the next few years. In fiscal 2004, 2003 and 2002, no customer generated more than 10% of our revenues. As our customer base grows and the number of fabless semiconductor companies increases, we expect our dependence on any one customer for revenues to decline. We expect that our sales to fabless semiconductor companies will grow, and as a result we will become more dependent on the availability of new manufacturing process technologies and capacity from third-party foundries to manufacture our customers’ products.

Acquisition

      On May 24, 2002, the Company acquired In-Chip Systems, Inc., a provider of logic platforms for SoC applications, thereby extending our product offerings for our semiconductor IP platform.

Proprietary and Intellectual Property

      We rely on a combination of nondisclosure agreements and other contractual provisions, as well as patent, trademark, trade secret and copyright law to protect our proprietary rights. Our general policy has been to seek patent protection for those inventions and improvements likely to be incorporated in our technologies or otherwise expected to be of value. We have an active program to protect our proprietary technology through the filing of patents.

      As of November 30, 2004, we had 40 U.S. patents issued, 31 U.S. patent applications on file and five draft applications being prepared for filing with the U.S. Patent and Trademark Office (USPTO). Our patents expire at various dates between 2019 and 2023, and we expect that once granted, the duration of patents covered by patent applications will be 20 years from the filing of the application. These patents will allow us to prevent others from infringing on some of our core technologies. We intend to continue to file patent applications as appropriate in the future. We cannot be sure, however, that our pending patent applications will be allowed, that any issued patents will protect our IP or will not be challenged by third parties, or that the patents of others will not seriously harm our ability to do business. In addition, others may independently develop similar or competing technology or design around any of our patents. We also have not secured patent protection in foreign countries, and we cannot be certain that the steps we take to prevent misappropriation of our intellectual property abroad will be effective.

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      In addition to patent protection, at November 30, 2004, we had four U.S. trademarks registered and four pending U.S. trademark applications on file with the USPTO. If the applications mature to registrations, these registrations would allow us to prevent others from using other similar marks on similar goods and services in the U.S. We cannot be sure, however, that the USPTO will issue trademark registrations for any of our pending applications. Further, any trademark rights we hold or may hold in the future may be challenged or may not be of sufficient scope to provide meaningful protection.

      We protect the source code of our technologies as both trade secrets and unpublished copyrighted works. We license the object code to our customers for limited uses and maintain contractual controls over the use of our software, but we may not have the resources to enforce such controls, and such controls may be declared invalid or unenforceable. Wide dissemination of our software makes protection of our proprietary rights difficult, particularly outside the United States, and we may not be able to assert equivalent rights with respect to source code developed by our employees in the Republic of Armenia (Armenia) and India as we could if it were developed in the United States.

      We protect our trade secrets and other proprietary information through nondisclosure agreements with our employees and customers and other security measures, although others may still gain access to our trade secrets or discover them independently.

      Although we believe that our technologies do not infringe on any copyright or other proprietary rights of third parties, from time to time, third parties, including our competitors, may assert patent, copyright and other intellectual property rights to technologies that are important to us. Currently no such claims exist.

Competition

      The semiconductor IP industry is very competitive and is characterized by constant technological change, rapid rates of technology obsolescence and the emergence of new suppliers. Our primary competition comes from the internal development groups of large IDMs that develop semiconductor IP for their own use. In addition, we face competition from other third-party providers of semiconductor IP, such as Artisan Components and Synopsys and certain DRAM IP providers, such as Monolithic System Technology, Inc. The semiconductor IP industry appears to be undergoing some significant changes with a number of recent corporate consolidation activities that will impact the competitive landscape. Additionally, the electronic design automation (EDA) companies such as Synopsys, Inc., Cadence Design Systems, Inc., Mentor Graphics Corporation and Magma Design Automation, Inc. could play a more significant role in the IP marketplace.

      As we continue to introduce new technologies, we may face competition from both existing semiconductor IP suppliers and new ones entering the market. We may also face competition from semiconductor companies that currently offer stand-alone memory technologies, such as Cypress Semiconductor, Hynix Semiconductor, IDT, Micron Technology and Samsung, if these companies were to make their technologies available in embedded form.

      In addition, third-party foundries may decide in the future to distribute embedded memories, logic and I/O components themselves, in addition to manufacturing chips containing third-party IP. TSMC, one of our third party foundry customers, has historically produced intellectual property components for use by third parties in designs to be manufactured at TSMC’s foundry. These components are designed to serve the same purpose as components produced by us. The intellectual property components developed by TSMC have competed and are expected to continue to compete with our products. We believe that TSMC is more aggressively developing and distributing these products to encourage its customers to use TSMC to manufacture their current and future designs. TSMC has substantially greater financial, manufacturing and other resources, name recognition and market presence than we do and the internal design group at TSMC has greater access to technical information about TSMC’s manufacturing processes. If TSMC is successful in supplying its own intellectual property components to third parties either directly or through distribution arrangements with other companies, our revenue from TSMC, our revenue from other customers and our operating results could be negatively affected.

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      We believe that important competitive factors in our market include performance and functionality of product, the ability to customize products for customer needs, length of development cycle, price, compatibility with prevailing design methodologies, interoperability with other devices or subsystems, reputation for successful designs and installed base, and the level of technical service and support.

Employees

      At November 30, 2004, we had 355 employees, including 56 in sales and marketing, 139 in research and development, 132 in engineering and operations and 28 in general and administrative functions. We have 163 of our engineers and other significant employees located outside of the United States. We believe that our future success will depend in part on our continued ability to attract, hire and retain qualified personnel. None of our employees are represented by a labor union, and we believe our employee relations are good.

Executive Officers of the Registrant

      The names and ages of our existing executive officers and significant employees at November 30, 2004 are set forth below

(*) Executive officer for purposes of Section 16(a) of the Securities Exchange Act of 1934.

      Adam A. Kablanian co-founded Virage Logic and has served as our President, Chief Executive Officer and Chairman since January 1996. In August 2003, Mr. Kablanian resigned his position as Chairman of the Board and continues to serve as President, Chief Executive Officer and a member of the Board as a Director. Before co-founding Virage Logic, Mr. Kablanian was a Department Manager for LSI Logic, a semiconductor integrated device manufacturer, from August 1994 to December 1995 where he was responsible for the embedded memory design division. Before he joined LSI Logic, Mr. Kablanian managed multi-foundry technology transfer programs as an engineering manager at Waferscale Integration, a designer of programmable system devices, from April 1990 to January 1994. Mr. Kablanian holds a B.A. in Physics from the University of California at Berkeley and an M.S. in Electrical Engineering from Santa Clara University.

      Alexander Shubat co-founded Virage Logic and has served as our Vice President of Research and Development and Chief Technical Officer and as a Director since January 1996. Before co-founding Virage Logic, Dr. Shubat served as Director of Engineering at Waferscale Integration from November 1985 to December 1995, where he managed various groups, including design, application-specific integrated circuit and high-speed memory. He holds fourteen patents and has contributed to more than 25 publications. Dr. Shubat holds a B.S. and an M.S. in Electrical Engineering from the University of Toronto, Canada and a Ph.D. in Electrical Engineering from Santa Clara University.

      Michael E. Seifert has served as our Vice President of Finance and Chief Financial Officer since February 2004. Prior to joining Virage Logic, Mr. Seifert served as CFO and corporate secretary at Southwall

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      James J. Ensell, joined Virage Logic as our Vice President of Marketing in October 2003. Before joining Virage Logic, Mr. Ensell served as Vice President, Business Development and Chief Information Officer for fabless custom integrated circuit maker eSilicon from August 2000 to October 2003. Before joining eSilicon, Mr. Ensell held positions as Senior Vice President of Products and Services at Zland, an internet eBusiness provider, from July 1999 to August 2000, and served as Vice President of Marketing at Cadence Design Systems’ Deep Submicron Business Unit from April 1997 to January 1999. Mr. Ensell also serves as chairman of the IP Committee of the Fabless Semiconductor Association (FSA). Mr. Ensell holds a B.S. in Electrical Engineering from Villanova University and an M.S. in Electrical Engineering from the University of Pennsylvania.

      Raj Singh has served as our Vice President of Worldwide Sales since March 2002. Before joining Virage Logic, Mr. Singh was Executive Vice President and General Manager and previously, Vice President of Worldwide Sales at 3Dlabs where he worked from April 1994 to March 2002. From February 1989 to March 1994, Mr. Singh held various positions with Dupont including Business Manager and Vice President of its Dupont Pixel operation. Mr. Singh holds a B.A. and an M.A. in English Literature from Kings College, Aberdeen University of Scotland.

      William J. Palumbo has served as our Vice President and General Manager of New Jersey Operations since July 1999. Before joining Virage Logic, Mr. Palumbo served as Director of the Physical Library Division for Mentor Graphics from October 1990 to July 1999. Before joining Mentor Graphics, Mr. Palumbo worked in various management positions at RCA, General Electric and Harris Semiconductor from December 1983 to September 1990. Mr. Palumbo holds one U.S. patent and has published numerous articles in technical and business forums. Mr. Palumbo holds a B.S. in Electrical Engineering from Rutgers University.

      Greer Person has served as our Vice President of Business Development since July 2003. Before joining Virage Logic, Mr. Person served as Senior Director and Head of Business Development at LSI Logic from November 2000 to July 2003, as Director of Business Development from June 1998 to November 2000, and previously in Product Line Management and Marketing Management for LSI Logic from August 1993 to February 1998. Before joining LSI Logic, Mr. Person held several engineering and operations management positions at Intergraph Corporation. Mr. Person holds a BSEE from the University of Mississippi and an M.B.A. from Santa Clara University.

      Yervant Zorian served as a Director from November 1997 to March 2001 and joined our management team as Vice President and Chief Scientist in May 2000. From November 1996 to June 2000, Dr. Zorian served as Chief Technical Advisor of LogicVision. Before that Mr. Zorian served as a Distinguished Member of the Technical Staff at Lucent Technologies, Bell Laboratories. Since August 2000, Dr. Zorian has served as a board member of HPL Technologies, Inc. Dr. Zorian holds a B.S. in Electrical Engineering from the University of Aleppo in Syria, an M.Sc. in Computer Engineering from the University of Southern California and a Ph.D. in Electrical Engineering from McGill University.

      Ehsan Rashid has served as our Vice President of Operations since October 2004. Prior to that he acted as Sr. Director of Operations since joining Virage Logic in April 2003. From January 2000 to April 2003, Mr. Rashid served as Senior Vice President and General Manager, Access Product Division, at Com21, Inc. From May 1999 to January 2000, Mr. Rashid served as Senior Director at Philips Semiconductor after it acquired VLSI Technology in May 1999. From December 1997 to May 1999, Mr. Rashid served as senior director of hardware and software engineering, and system applications in the Consumer Digital Entertainment Division of VLSI Technology. Prior to VLSI/ Philips, Mr. Rashid served as the Director of Engineering

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      Alok Singh has served as our Vice President and General Manager of India Operations since September 1997. Before joining Virage Logic, Mr. Singh served as Director of Design Automation from November 1996 to August 1997 and Manager, Design Automation from April 1990 to October 1996 at Waferscale Integration. Mr. Singh holds a B.S. in Electrical Engineering from the University of Glasgow, Scotland.

Facilities

      In October 2002, our principal administrative, sales, marketing and research and development facility moved to a new building in Fremont, California and occupies approximately 61,500 square feet. This facility is leased through December 2006. We also lease additional offices in Bellevue, Washington and Clinton, New Jersey that are occupied mainly by research and development and engineering personnel. The Bellevue office, which occupies approximately 4,100 square feet, is leased through March 2005. The Clinton office, which occupies approximately 10,900 square feet, is leased through July 2005. In addition, we have development centers in Armenia and India. In September 2003, our development center in Armenia moved into our new building owned by us. The office space is approximately 40,000 square feet and the total cost of the building and leasehold improvements is approximately $1.8M. The development center in India is located in Noida, near Delhi, and occupies approximately 26,000 square feet in a building leased with a lease term under which the company has the right to but not the obligation to occupy the facility through July 2008.

      None.

      None.

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PART II

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters.

Market Price and Dividends on Virage Logic Common Stock

      Virage Logic Corporation’s common stock is traded on the Nasdaq National Market under the symbol “VIRL” since our initial public offering on August 1, 2000. The following table sets forth, for the periods indicated, the high and low closing prices for the common stock as reported on the Nasdaq National Market.

      As of November 30, 2004, there were approximately 91 stockholders of record of our common stock.

      The Company has never paid or declared any cash dividends on our common stock or other securities and does not anticipate paying cash dividends in the foreseeable future.

Equity Compensation Plan Information

      The equity compensation plan information required to be provided in this Annual Report on Form 10-K is incorporated by reference to the Company’s proxy statement for the 2005 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days after the end of our fiscal year ended September 30, 2004.

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Item 6. Selected Consolidated Financial Data.

      The selected consolidated financial data set forth below should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the notes thereto included elsewhere in this filing. The consolidated statement of operations data for each of the fiscal years ended September 30, 2004, 2003 and 2002 and the consolidated balance sheet data at September 30, 2004 and 2003 have been derived from our audited consolidated financial statements included elsewhere in this filing. The consolidated statement of operations data for the fiscal years ended September 30, 2001 and 2000 and the consolidated balance sheet data at September 30, 2002, 2001 and 2000 have been derived from our audited consolidated financial statements not included in this filing. The historical financial information may not be an accurate indicator of our future performance.

SELECTED CONSOLIDATED CONDENSED FINANCIAL DATA