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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

for the fiscal year ended September 30, 2003

Commission File No. 000-23649

ARTISAN COMPONENTS, INC.

(Exact name of Registrant as specified in its charter)

Registrant’s telephone number, including area code: (408) 734-5600

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.001 par value per share (title of class)

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  x    No  ¨

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.  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act). Yes  x    No  ¨

The aggregate market value of Common Stock held by non-affiliates of the registrant as of March 31, 2003 was $258.4 million. Shares of Common Stock held by each executive officer, director and by each person who owns 5% or more of the outstanding Common Stock have been excluded in that 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 October 31, 2003 was 22,206,474.

DOCUMENTS INCORPORATED BY REFERENCE

The Registrant has incorporated by reference into Part III of this Annual Report on Form 10-K portions of its Proxy Statement for its 2004 Annual Meeting of Stockholders.

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ARTISAN COMPONENTS, INC.

ANNUAL REPORT ON FORM 10-K

YEAR ENDED SEPTEMBER 30, 2003

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FORWARD-LOOKING INFORMATION

This Annual Report on Form 10-K and the information incorporated by reference herein contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. When used in this Report, the words “expects,” “anticipates” and “estimates” and similar expressions are intended to identify forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those we expect or anticipate. These risks and uncertainties include those discussed below and those discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Future Operating Results.” We undertake no obligation to publicly update or correct these forward-looking statements to reflect events or circumstances that occur after the date this Report is filed with the Securities and Exchange Commission.

PART I

ITEM 1.    BUSINESS

Overview

We are a leading provider of physical intellectual property components for the design and manufacture of integrated circuits, including those known as system-on-a-chip integrated circuits. Our products include embedded memory, standard cell, input/output components and analog and mixed-signal products, which are designed to achieve the best combination of performance, density, power and yield for a given manufacturing process. Our intellectual property components are pre-tested by producing them in silicon to ensure that they perform to specification. This enables designers to reduce the risk of design failure and gain valuable time to market. We license our products to customers for the design and manufacture of integrated circuits used in complex, high volume applications such as portable computing devices, communication systems, cellular phones, consumer multimedia products, automotive electronics, personal computers and workstations.

We derive a substantial majority of our revenue from integrated circuit manufacturers who pay license fees and royalties to us to use our intellectual property components in the products they manufacture. These integrated circuit manufacturing customers work with integrated circuit designers who incorporate our intellectual property components in their designs. Our customers include the following: foundries, which are independent manufacturing facilities; integrated circuit companies that design and manufacture their own integrated circuit products; system manufacturers which are integrated circuit companies that design and manufacture integrated circuits for use in their electronic products; integrated circuit companies that manufacture products for their customers; and fabless integrated circuit companies, which do not have their own manufacturing facilities, but use our intellectual property components in their integrated circuit designs.

Integrated circuit designers use our intellectual property components to help ensure that integrated circuits will work to specification before they are manufactured. These integrated circuit designers are customers of our integrated circuit manufacturing customers. We serve as an interface layer between integrated circuit designers and manufacturers. This manufacturing process interface layer is important since every integrated circuit design must be mapped into a given manufacturing process to achieve specified performance and desired yield. The use of our intellectual property components by integrated circuit designers encourages integrated circuit manufacturers to license our intellectual property components. We believe that integrated circuit designers view intellectual property components as an important link between the design of an integrated circuit and the manufacturing process.

We have licensed our intellectual property components to over a thousand companies involved in integrated circuit design. We make the core set of our products available to licensed integrated circuit designers at no charge. We also provide customized intellectual property components and services to our licensed customers on a separate fee basis.

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We license our intellectual property components on a nonexclusive, worldwide basis to major integrated circuit manufacturers. We charge manufacturers a license fee that gives them the right to manufacture integrated circuits containing intellectual property components we have developed for their manufacturing process. With limited exceptions, manufacturers also agree to pay us royalties based on the selling prices of integrated circuits or wafers that contain our intellectual property components. Generally, we credit a portion of the royalty payments to the manufacturer’s account to be applied against license fees for future orders placed with us, if any, payable by the manufacturer. The portion of the royalty payment that is credited to a manufacturer’s account to be applied against future license fees, if any, is based on negotiations at the time the license arrangement is signed.

We incorporated in California in April 1991 as VLSI Libraries Incorporated, changed our name to Artisan Components, Inc. in March 1997 and reincorporated in Delaware in January 1998. Our principal executive offices are located at 141 Caspian Court, Sunnyvale, California 94089-1013, our telephone number is (408) 734-5600 and our website is www.artisan.com, which includes links to reports that we have filed with the Securities and Exchange Commission or SEC. However, the contents of our website are not incorporated by reference in this Annual Report on Form 10-K. Our trademarks include Artisan, Process-Perfect, SAGE and the Artisan logo. This Annual Report on Form 10-K also includes our and other organizations’ product names, trade names and trademarks.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements, and other information with the SEC, in accordance with the Exchange Act. You may read and copy any document we file with the SEC at the following public reference room:

Public Reference Room

450 Fifth Street, N.W.

Room 1024

Washington, D.C. 20549

1-800-SEC-0330

Please call the SEC at 1-800-SEC-0330 for further information about the public reference room. Our reports, proxy statements and other information filed with the SEC are also available to the public over the Internet at the SEC’s World Wide Web site that at http://www.sec.gov.

INDUSTRY BACKGROUND

Evolution of the integrated circuit industry

The integrated circuit industry has undergone a drastic change over the past three decades that has led to the proliferation of intellectual property components used in complex integrated circuits including those known as system-on-a-chip integrated circuits. In its infancy, the industry was vertically integrated with integrated circuit manufacturers performing all aspects of production, including electronic design, manufacturing and marketing. The development of the commercial market for third party intellectual property components used in complex integrated circuits resulted from continuing specialization in the integrated circuit industry. This trend was driven by a growth in design complexity due to improvements in manufacturing technology and an increasing focus on core competencies. By the 1980s, integrated circuit manufacturers began purchasing software design tools from commercial suppliers in order to focus on their core competencies. One driver was the capability of personal computers and the resulting escalation of integrated circuit design complexity. During the 1980s, application specific integrated circuit manufacturers developed a new approach that allowed their customers to perform the logic design of an integrated circuit while the application specific integrated circuit manufacturers performed the detailed physical implementation of the design and manufactured the integrated circuit. The development of the application specific integrated circuit industry led to the emergence of a number of integrated circuit design companies in the early 1990s. The integrated circuit design companies chose to focus on specific design expertise, take advantage of the availability of excess integrated circuit manufacturing capacity and avoid the capital expenditures necessary to build manufacturing facilities. Throughout this period, integrated circuit

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manufacturers continued to focus on their core competencies in manufacturing processes. Due to the greatly increased complexity of integrating multiple functions on a single integrated circuit, integrated circuit manufacturers began to outsource the design of particular intellectual property components critical to the successful development of integrated circuits.

The productivity gap

Today, it is possible to place tens of millions of transistors on a single integrated circuit. State of the art manufacturing facilities of the 1980s produced integrated circuits using process geometries of one millionth of a meter, or 1.0-micron. Current state of the art manufacturing facilities use 0.13-micron process geometries, and many integrated circuit manufacturers have begun the transition to facilities using 90 nanometer, or 0.09-micron, processes. The development of design tools has not kept pace with the development of manufacturing processes. Advances in integrated circuit manufacturing processes have enabled the transistor density on integrated circuits to double approximately every 18 months. The integrated circuit design industry has struggled to improve design productivity as fast as the increases in transistor density. The need to close this productivity gap has furthered the development of the market for commercial intellectual property components.

Integration of digital and analog on the same chip

Independent manufacturing facilities and integrated circuit companies may invest billions of dollars designing and building semiconductor manufacturing facilities. In order to generate the high volume production required to realize a return on their investment, these manufacturers rely in large part on semiconductor products targeted to the consumer market. Today, the consumer electronics market is dominated by communications and computing applications and these applications are increasingly delivered via hand-held devices. These hand-held computing devices require the integration of digital computing and analog communications components in addition to analog power management. The market advantage created by analog and digital integration is a significant reduction in the number of components. However, integrating analog components together with digital components often presents difficult technical challenges for integrated circuit designers. If such integration is accomplished efficiently, it can lower material and test costs that in turn may help reduce overall costs of manufacturing, enhance performance and improve reliability.

The system-on-a-chip

The improvement in process technologies combined with the continuing trend to sub-micron feature sizes has enabled the integration of multiple functions into a single integrated circuit. These highly complex integrated circuits are known as system-on-a-chip integrated circuits that combine all of the functionality of printed circuit boards onto a single integrated circuit. System-on-a-chip integrated circuits improve overall system cost, speed, function and power consumption. These integrated circuits are optimal for use in complex, high volume applications such as portable computing devices, cellular phones, consumer multimedia products, automotive electronics, personal computers and workstations.

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As shown above, in both a printed circuit board system and in a system-on-a-chip, the building blocks typically include memory, standard cell, input/output, microprocessor, digital signal processor, mixed-signal and analog components. However, integration of these components into system-on-a-chip integrated circuits at process geometries of 0.25-micron or below is far more complex and time consuming than the design of a traditional printed circuit board system. Integrated circuit manufacturers are finding it increasingly difficult to develop these components internally and integrate them due to reduced product development budgets and given shorter product life cycles and the importance of reducing time to market. We believe the use of commercial intellectual property components to leverage design and manufacturing capabilities can be a significant competitive advantage to integrated circuit manufacturers.

Market opportunity for integrated circuit intellectual property components

Commercial intellectual property components have enabled integrated circuit designers to reduce the risk of design failures; reduce design time for system-on-a-chip integrated circuits; decrease the overall cost of integrated circuit design; and more effectively address design and productivity issues associated with process geometries of 0.25-micron and below. Integrated circuit manufacturers require intellectual property components that are designed to achieve the best combination of performance, speed, density and yield for a given manufacturing process while reducing time to market. Although the electronic design automation tool industry has successfully developed partial solutions to increase design productivity and performance, electronic design automation tools have not completely overcome the challenges of creating intellectual property components tailored to a particular manufacturing process within an increasingly compressed time to market window. In addition, integrated circuit manufacturers have increased their internal design resources to produce intellectual property components for themselves and for their customers. However, the use of intellectual property components supplied by a specific integrated circuit manufacturer does not allow integrated circuit designers the flexibility they desire to enable them to use an alternative manufacturer. Many of these same integrated circuit manufacturers use commercial intellectual property components in order to harness the strengths of their manufacturing processes, increase the performance of their manufactured products, accelerate time to market for themselves and their customers and gain access to integrated circuit designers that utilize commercial intellectual property components.

OUR SOLUTION

We provide physical intellectual property components for the design and manufacture of complex integrated circuits. Our intellectual property components are developed and delivered using a proprietary methodology that includes a set of commercial and proprietary electronic design automation tools and design expertise. This methodology enables us to automate our production process and deliver high quality intellectual property components in a short period of time. These components and our methodology are our core technology. Our intellectual property components are designed to optimize the combination of performance, density, power and yield for a given manufacturing process. Our intellectual property components offer customers the benefits described below.

Significant time to market advantages

We enable integrated circuit design companies to reduce the time required to bring new integrated circuits to market by:

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Long-term product development commitment

Our ability to adapt, customize and build on our core technology for use in new processes and designs provides each integrated circuit design customer with a ready source of reliable intellectual property components for future processes and designs. This enables integrated circuit designers to standardize on our intellectual property components, accelerate their product development and focus internal engineering resources on their core competencies.

Cost effective solutions

As integrated circuit manufacturing process geometries shrink and the complexity of integrated circuit designs increases, the cost to design system-on-a-chip integrated circuits increases significantly. By providing reliable intellectual property components with significant time to market benefits, we enable customers to reduce design costs, minimize integration costs and optimize manufacturing yield. Moreover, by using our intellectual property components, integrated circuit companies avoid the cost of recruiting and training and employing a significant group of engineers dedicated to intellectual property component design.

OUR STRATEGY

Our goals are to establish Artisan as a globally recognized brand for intellectual property components and methodology within the integrated circuit design and manufacturing industry and to further expand our customer base. Our customer base includes over a thousand companies involved in integrated circuit design and many of the leading manufacturers of integrated circuits around the world. We intend to achieve these goals by pursuing the following key elements of our strategy described below.

Broaden relationships with integrated device manufacturers and application-specific integrated circuit manufacturers

Building upon our strong base of integrated circuit manufacturing customers, we intend to strengthen and expand our relationships with integrated device manufacturers and application specific integrated circuit manufacturers, which often produce integrated circuits in high volume. We intend to continue our sales effort to address the specific service and support requirements of integrated device manufacturers and application specific integrated circuit manufacturers. We also plan to play a key role in facilitating the emerging relationships between integrated device manufacturers, application specific integrated circuit manufacturers and foundries by providing integrated device manufacturers and application specific integrated circuit manufacturers with intellectual property components for use in external manufacturing processes.

Maintain technological leadership

Our experience in working with many leading integrated circuit manufacturing customers during the development of new manufacturing processes has enabled us to develop intellectual property components optimized for performance, density, power and yield for a given manufacturing process. As manufacturing process technology continues to evolve to ever smaller process geometries, we believe that an in depth understanding of manufacturing process technology is essential to the development of intellectual property components optimized for such manufacturing processes. We intend to maintain our technological leadership position by enhancing our existing digital, analog and mixed-signal products and continuing to develop, internally or through possible acquisitions, new generations of products. To further maintain our technological leadership, we plan to continue to develop our internal expertise in digital, analog and mixed-signal manufacturing process technology. Such expertise is particularly important for designing analog components. We also intend to continue to work with our integrated circuit manufacturing customers as early as possible in the development of new manufacturing process technologies.

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Expand our intellectual property product offerings

We intend to develop and acquire additional intellectual property components that are complementary to our existing portfolio. By expanding our product portfolio, we expect to offer a more comprehensive solution to integrated circuit design teams and integrated circuit manufacturers and further our position as a leader in the integrated circuit intellectual property industry.

Continue to offer superior customer support

We intend to attract, train and retain qualified employees for customer support. In addition, we have recently implemented a customer relationship management system, or CRM System, and will continue to refine and enhance our CRM System. We plan to expand our operations geographically to maintain proximity to our expanding customer base and provide regional support to our customers. We have established an engineering service and support facility in Bangalore, India, and plan to increase our presence in China and Taiwan.

Further develop the Artisan user community

Our user community has grown as a result of the demand from design teams for our products. As our products have gained broad industry acceptance, licenses for our technology have helped manufacturers attract new integrated circuit design customers. We believe that the Artisan user community is a key asset of our business. We plan to work closely with this user community in order to gain insight into new process developments and leading-edge integrated circuit designs, improve our products and further expand the Artisan user community.

PRODUCTS

Our current family of intellectual property components includes embedded memory, standard cell, input/output components and analog and mixed-signal products. Together these components constitute a substantial majority of the silicon area on a typical system-on-a-chip integrated circuit and have a substantial impact on the overall performance of the integrated circuit. Our contracts with integrated circuit manufacturers generally require them to pay a license fee to us ranging from approximately $250,000 to $650,000 for each product delivered under a contract. Generally, our license contracts involve multiple products. Throughout the production cycle, integrated circuit manufacturers may request our support for derivative processes that result in additional license revenue.

Our intellectual property components are developed and delivered using a proprietary methodology called “Process-Perfect^TM” that includes a set of commercial and proprietary electronic design automation tools and techniques. This methodology ensures that our intellectual property components are designed to achieve the best combination of performance, density, power and yield for a given manufacturing process. Our portfolio of products combined with the Process-Perfect methodology, allows us to satisfy our integrated circuit manufacturing customers’ timing and quality requirements in a cost effective manner. Our intellectual property components are easily integrated into a variety of customer design methodologies and support industry standard integrated circuit design tools, including those from electronic design automation tool vendors such as Cadence Design Systems, Inc., or Cadence, Mentor Graphics Corporation, or Mentor Graphics and Synopsys, Inc., or Synopsys, as well as customers’ proprietary integrated circuit design tools. To support these various integrated circuit design tool environments, each of our products includes a comprehensive set of verified tool models.

Memory products

Our embedded memory components include random access memories, read only memories and register files. Our high-speed, high-density and low-power components include single- and dual-port random access memories, read only memories, and single-, two- and three-port register files. Our embedded memory components are configurable and vary in size to meet the customer’s specification. For example, our memory components will support sizes from 2 to 128 bits wide and from 8 to 16,384 words. All of our memory

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components include features such as a power down mode, low voltage data retention and fully static operation. In addition, our memory components may include built-in test interfaces that support popular test methodologies. We offer an additional feature for our memory components, known as Flex-Repair™ that includes redundant storage elements which may help increase the manufacturing yield of integrated circuit designs containing large memories.

Standard cell products

Standard cells map the logic functions of a design to the physical functions of the design, an essential function for all integrated circuits. Our SAGE-X™ standard cell products include between 475-650 cells optimized for each customer’s preferred manufacturing process and integrated circuit design tool environment that result in greater density as compared to competitive standard cell components. We offer standard cell components that are optimized for high performance, high density or low power to meet the needs of different markets.

Input/output products

Our input/output components include over 600 standard input/output functions. We also offer a wide variety of specialized input/output components that are compatible with industry standard PCI, GTL, AGP, USB, SSTL2 and LVDS interfaces. In addition, we offer input/output components for many additional industry standard interfaces. Every input/output component utilizes each integrated circuit manufacturer’s proprietary manufacturing process rules, pad pitch and electrostatic discharge requirements, resulting in superior performance, reliability and manufacturability.

Analog products

Analog components are important elements in today’s system-on-a-chip designs because such designs often require, as part of their application, the ability to take real world inputs, such as sound and images, and process them in a digital format. Artisan offers a wide variety of analog components from analog timing functions to converter products. An example of our analog component offerings is our phase locked loops, which can be used in a variety of communications, consumer, computing and graphics applications.

Mixed-signal products

Mixed-signal products are used to process analog signals digitally. Our mixed-signal product offering includes our serializer/de-serializers, which are used for high-speed switching; our PCI-Express™ PHY, which is used for high-speed bus interfaces, and our DDRI/DDRII/GDDRIII Interface, which is used for high-speed memory interfacing.

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PRODUCT DEVELOPMENT

We target the rapidly growing system-on-a-chip market. Our products include embedded memory, standard cell, input/output components and analog and mixed-signal products. Because of the complexity of these intellectual property components, our design and development process is a multidisciplinary effort requiring expertise in electronic circuit design, process technology, physical layout, design software, model generation, data analysis and processing and general integrated circuit design. These activities involve the development of more advanced versions of our intellectual property components and the continued development of new intellectual property components for current and anticipated manufacturing processes. We have engaged in and intend to continue to engage in research and development activities to automate our design processes.

Engineering costs are allocated between cost of revenue and product development. We track specific customer projects and product development efforts based on unique project codes that are assigned at the inception of each project. Individual engineers devoted to these projects record time to these project codes as actual hours are incurred. Engineering efforts devoted to specific customer projects are recognized as cost of revenue in the same period that revenues are recognized. Engineering efforts devoted to the general development of our technology are charged to product development. Engineering costs related to product development are expensed as incurred. Product development expenses were $18.4 million in fiscal 2003, $11.9 million in fiscal 2002 and $12.4 million in fiscal 2001. We expect that we will continue to invest substantial funds for product development.

SALES, MARKETING AND DISTRIBUTION

We license our intellectual property components on a nonexclusive, worldwide basis to major integrated circuit manufacturers. We have licensed and distributed our intellectual property components to over 15 companies involved in the manufacture of integrated circuits who have agreed to pay an upfront license fee and also agree to make royalty payments in the event that our intellectual property components are incorporated into designs ultimately manufactured. For most of our integrated circuit manufacturing customers, we distribute and license our intellectual property components to companies that design integrated circuits. While the basic elements of our memory, standard cell and input/output components are distributed to design companies at no charge, design companies pay us a direct license and support fee to receive analog, mixed-signal and other customized components and support from us. As part of the license agreement entered into by the design companies, the design companies agree to manufacture any integrated circuit design using any of our intellectual property components at the particular integrated circuit manufacturer for which we developed the intellectual property components. The integrated circuit manufacturer then generally pays us a royalty based on the selling prices of integrated circuits or wafers that contain our intellectual property components. We have licensed and distributed our intellectual property components at no charge to over a thousand companies involved in integrated circuit design, including companies involved in computing, communications, consumer products, graphics, networking and other applications. Over 100 of these design companies have paid us direct license or support fees in order to receive modified intellectual property components and/or support from us.

We have several industry partner programs whereby our partners provide a wide variety of intellectual property solutions, design services and tool support to streamline the design process for users of our intellectual property components. Through these programs, we provide intellectual property components and support to over 150 design support companies who use these intellectual property components in their work for our licensed users. Over 15 of these design support companies have paid us direct license or support fees in order to receive modified products and support from us.

As of September 30, 2003, our direct sales force consisted of 34 employees who are paid on commission in addition to their base salaries. In connection with our acquisition on February 19, 2003 of NurLogic Design, Inc., or NurLogic, we increased our direct sales force by 10 people. We believe that our sales, marketing and distribution approach enables us to leverage the integrated circuit manufacturers’ sales and marketing

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organizations and limit the costs we would otherwise have associated with hiring, training and compensating the large sales force necessary to negotiate with each end-user customer. In addition, our web-based intellectual property design platform enables integrated circuit designers to access our intellectual property components 24 hours per day. The platform assists us in gathering data about designers using our intellectual property components and the potential integrated circuit manufacturers the designers may elect of have manufacture their integrated circuits. We have sales offices in Sunnyvale, California; San Diego, California; Boston, Massachusetts; Tokyo, Japan; Singapore and Paris, France.

CUSTOMERS

We license our intellectual property components on a nonexclusive, worldwide basis to major integrated circuit manufacturers. We charge manufacturers a license fee that gives them the right to manufacture integrated circuits containing intellectual property components we have developed for their manufacturing processes. Many of the world’s leading integrated circuit manufacturers are among our customers. Our top 20 customers in terms of total revenue for the three years ended September 30, 2003 were 1^st Silicon (Malaysia) Sdn. Bhd., Chartered Semiconductor Manufacturing Ltd., or Chartered, Conexant Systems, Inc., Dongbu Electronics Co., Ltd., Hynix Semiconductor, Inc., International Business Machine Corporation, or IBM, Infineon Technologies AG, Jazz Semiconductor, Inc., National Semiconductor Corporation, NEC Corporation, NVIDIA Corporation, Sanyo Electric Co., Ltd., Sharp Electronics Corporation, Silterra Malaysia Sdn. Bhd., Semiconductor Manufacturing International Corporation, or SMIC, Sony Corporation, Semiconductor Technology Academic Research Center, or STARC, Tower Semiconductor Ltd., Taiwan Semiconductor Manufacturing Company, or TSMC, and United Microelectronics Corporation.

Historically, NurLogic licensed its products directly to end users who agreed to pay license fees directly to NurLogic. Our acquisition of NurLogic has led to an increase in our interaction with integrated circuit designers. To date, we have generally licensed our analog and mixed-signal components directly to integrated circuit designers. This relationship has provided us with a more in-depth understanding of end user’s business needs. Over the course of such relationships, we have had the opportunity to review end user design requirements earlier in the design cycle, which may help us deliver optimized intellectual property components to market sooner. We are in the process of marketing our analog and mixed-signal offerings to semiconductor manufacturers for purposes of distributing such products to designers who agree to manufacture their designs at the foundry for which such components were developed. We cannot be certain that semiconductor manufacturers will be willing to license and pay for analog and mixed-signal intellectual property components for the benefit of end users in the same way as such manufacturers have historically licensed digital intellectual property components from us. Such analog and mixed-signal intellectual property components tend to require a greater degree of customization for a particular use than do many of our other products.

We have been dependent on a relatively small number of integrated circuit manufacturing customers for a substantial portion of our annual revenue, although the integrated circuit manufacturers comprising this group have changed from time to time. In fiscal 2003, IBM accounted for 18% of our total revenue, TSMC accounted for 17% of our total revenue and Chartered accounted for 10% of our total revenue. In fiscal 2002, TSMC accounted for 39% of our total revenue. In fiscal 2001, TSMC accounted for 26% of our total revenue and Synopsys accounted for 12% of our total revenue. We anticipate that our revenue will continue to depend on a limited number of major integrated circuit manufacturing customers for the foreseeable future. However, the major integrated circuit manufacturing customers and the percentage of revenue they represent are likely to continue to vary from period to period depending on the addition of new contracts, the timing of work performed by us and the number of designs utilizing our intellectual property components.

COMPETITION

Our strategy of targeting integrated circuit manufacturers and integrated circuit designers that participate in, or may enter, the integrated circuit market requires us to compete in intensely competitive markets. We face

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significant competition from third party intellectual property component providers, such as Barcelona Design, Inc. or Barcelona Design, DOLPHIN Integration SA, or DOLPHIN, Faraday Technology Corporation or Faraday Technology, Monolithic System Technology, Inc., or Monolithic System Technology, Neolinear, Inc., or Neolinear, Rambus Inc., or Rambus, TriCN, Inc., or TriCN, VeriSilicon Microelectronics (Shanghai) Co. Ltd., or VeriSilicon, Virage Logic Corporation, or Virage Logic and Virtual Silicon Technology, Inc., or Virtual Silicon and from the internal design groups of integrated circuit manufacturers such as TSMC and IBM. In addition, we face competition from small consulting firms and design companies that operate in the intellectual property component segment of the market and offer a limited selection of specialized intellectual property components.

We face significant competition from the internal design groups of integrated circuit manufacturers that have expanded their manufacturing capabilities and portfolio of intellectual property components to participate in the integrated circuit market. Integrated circuit manufacturers that license our intellectual property components have historically had their own internal intellectual property component design groups. These design groups continue to compete with us for access to the integrated circuit manufacturer’s intellectual property component requisitions and, in some cases, compete with us to supply intellectual property components to third parties on a merchant basis. Intellectual property components developed by internal design groups are designed to utilize the qualities of their own manufacturing process, and may therefore benefit from certain capacity, informational, cost and technical advantages. If internal design groups expand their product offerings to compete directly with our intellectual property components or actively seek to participate as vendors in the intellectual property component market, our revenue and operating results could be negatively affected.

TSMC, one of our largest integrated circuit manufacturing 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. Distribution partners selected by TSMC include Cadence, Magma and Virage Logic. Some of TSMC’s distribution partners, such as Cadence, may have greater resources, name recognition and distribution networks than we do. 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.

We believe that we have the following competitive advantages:

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Despite these competitive advantages, we also faces numerous challenges associated with overcoming the following disadvantages:

PATENTS AND INTELLECTUAL PROPERTY PROTECTION

We rely primarily on a combination of nondisclosure agreements, contractual provisions, patent, trademark, trade secret, and copyright law to protect our proprietary rights. We have an active program to protect our proprietary technology through the filing of patents. As of September 30, 2003, we had 41 issued US patents, 23 patent applications pending before the US Patent and Trademark Office, five issued foreign patents and 12 patent applications pending in foreign countries. Generally our patents expire between 2017 and 2020.

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ARTISAN, the ARTISAN COMPONENTS logo, and PROCESS-PERFECT are registered U.S. trademarks. Foreign trademark applications for these marks are pending.

We protect our trade secrets and other proprietary information through confidentiality agreements with our employees and customers. Despite these efforts, there can be no assurance that others will not gain access to our trade secrets, that our trade secrets will not be independently discovered by competitors or that we can meaningfully protect our intellectual property. Effective trade secret protection may be unavailable or limited in certain foreign jurisdictions, such as China, where we sell our intellectual property components. The risks associated with protection of our intellectual property rights in foreign countries are likely to increase as we expand our international operations. As a result, we may experience difficulty protecting our intellectual property from misuse or infringement by others.

Our typical license agreements contain indemnification provisions under which we may be required to defend or settle an infringement claim and pay settlement amounts or damages awarded with respect to such claims. Such indemnification obligations are subject to a number of exceptions and generally limited to specific jurisdictions. In addition, the total amount of liability is generally capped at a specific dollar amount approximating the consideration received by us under the contract in question; however, such limits on our liability are generally not included in contracts we assumed in connection with our acquisition of NurLogic. As part of our indemnification obligations, we may also be required to provide substantial technical assistance to our customers regarding allegedly infringing products. If a product is, or in our opinion is likely to become, the subject of a claim alleging infringement, our indemnification obligations generally grant us the option to choose to procure a license for our customer, replace or modify the allegedly infringing product, or terminate the license to the allegedly infringing product and refund a portion of the license fees, the amount of which varies inversely with the length of time elapsed since the product was delivered.

In any potential dispute involving our intellectual property, our customers and strategic partners could also become the target of litigation. This could trigger our technical support and indemnification obligations in our license agreements, which could result in substantial expense to us. In addition to the time and expense required for us to supply support or indemnification to our customers and strategic partners, any litigation could severely disrupt or shut down the business of our customers and strategic partners, which in turn would hurt our relations with them and harm our operating results.

From time to time, we may be subject to claims by customers of the companies we acquire that our intellectual property components or products of acquired companies that have been incorporated into end user products infringe the intellectual property rights of others.

We have been notified by one of NurLogic’s customers that it is requesting indemnification from NurLogic (now one of our wholly owned subsidiaries) because of two complaints filed against that customer alleging that some of that customer’s products infringe third party patents. We believe that one complaint is without merit with respect to technology licensed by NurLogic and we are in the process of evaluating another complaint for which we believe we have meritorious defenses with respect to the technology licensed by NurLogic. However, there can be no assurance that the courts would not find that the technology licensed by NurLogic infringes third party patents. Whether or not the asserted patents are valid and whether or not a court finds that the customer’s products infringe, the investigation and resolution of these indemnity claims and any related litigation could be expensive and could consume substantial amounts of management time and attention.

FOREIGN OPERATIONS

We offer various intellectual property components and services to our customers; however, we do not manage our operations by these intellectual property components and services. Instead, we view our company as one operating segment when making business decisions. We use one measurement of profitability for our business. We currently operate principally in the United States, Taiwan, Japan and other countries in Asia and Europe.

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Historically, a substantial portion of our total revenue has been derived from customers outside the United States, primarily from Asia and Europe. International revenue as a percentage of our total revenue was approximately 69% in fiscal 2003, 75% in fiscal 2002 and 70% in fiscal 2001. We anticipate that international revenue will remain a substantial portion of our total revenue in the future. To date, all of the revenue from international customers has been denominated in U.S. dollars.

EMPLOYEES

As of September 30, 2003, we had 343 employees compared to 181 employees at September 30, 2002. Our success is highly dependent on our ability to attract, train and retain qualified employees. Competition for employees is intense in the software industry. To date, we believe we have been successful in our efforts to recruit qualified employees and train and retain them, but there is no assurance that we will continue to be as successful in the future. None of our employees are subject to collective bargaining agreements. We believe that our relationship with our employees is good.

EXECUTIVE OFFICERS

The following table lists our current executive officers as of the date of this filing and sets forth information as of October 1, 2003:

Mark R. Templeton has served as our president and chief executive officer since April 1991 when he co-founded our company. In addition, Mr. Templeton has served as a member of our board of directors since April 1991. From April 1990 to March 1991, Mr. Templeton was director of the Custom IC Design Group at Mentor Graphics Corporation, an electronic design automation company. From October 1984 to March 1990, he held various positions with Silicon Compilers Systems Corporation, an electronic design automation company, with the last position being director of the Custom IC Design Group.

Joy E. Leo has served as our vice president of finance and administration, chief financial officer and secretary since September 2000. From January 2000 to August 2000, she served as vice president of finance and administration and chief financial officer for IMP, Inc, an integrated circuit company. From August 1998 to January 2000, she was vice president of finance, operations and administration at Innomedia Incorporated, a telecommunications company. From June 1995 to January 1998, she was vice president and chief financial officer for Philips Components, a division of Royal Philips Electronics N.V.

Scott T. Becker has served as our chief technical officer since April 1991 when he co-founded Artisan Components. In addition, Mr. Becker has served as a member of our board of directors since April 1991. From

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April 1990 to April 1991, he was manager of the library development group of the IC division of Mentor Graphics. From May 1985 to April 1990, he was responsible for library development at Silicon Compilers.

Harry Dickinson has served as our chief operating officer since June 2001. From January 2000 to June 2001, Mr. Dickinson took time off from his business activities to pursue personal interests. From December 1998 to January 2000, Mr. Dickinson was vice president of worldwide sales for Cygnus Solutions, now known as Red Hat, Inc., a computer software distribution company. From October 1997 to October 1998, he was president and chief executive officer of Entridia Corporation, subsequently acquired by Stratigos Networks, LLC, a network controller company, of which he was also a founder. From January 1992 to October 1997, he was senior vice president of sales for S3 Incorporated, now known as SONICblue Incorporated, a fabless integrated circuit company specializing in graphics chips.

James H. Hogan has served as our senior vice president of business development since October 2002. From August 2000 to September 2002, he was senior vice president of business development and chief technology officer of Cadence. From February 1997 to October 2000, Mr. Hogan held several positions at Cadence including president of Cadence Japan from December 1999 to October 2000, corporate vice president of marketing from December 1998 to December 1999, and corporate vice president for field operations from February 1997 to December 1998. From December 1996 to February 1997, he was chief operating officer of Smart Machines Inc., now a wholly-owned subsidiary of Brooks Automation, Inc., an integrated circuit equipment automation company.

Dhrumil Gandhi has served as our senior vice president of product technology since May 2001. From May 1993 to May 2001, Mr. Gandhi served as our vice president of engineering. From July 1983 to May 1993, he served as senior manager for advanced application specific integrated circuit design systems at Mentor Graphics.

Brent Dichter has served as our vice president of engineering since May 2001. Mr. Dichter served as our vice president of product/program management from March 2000 to May 2001 and as our director of engineering from November 1998 to March 2000. From January 1997 to November 1998, he served as vice president of silicon technology at Multi Dimensional Computing, a computer company specializing in graphics chip design. From July 1995 to January 1997, he was director of strategic marketing for Xilinx, Inc., a field programmable gate array company.

Neal Carney has served as our vice president of marketing since August 2001. From June 2000 to August 2001, he was vice president of marketing for Tripath Technology, Inc., a fabless integrated circuit company. From January 1998 to June 2000, he was business unit manager of imaging products for Agilent Technologies, Inc., a technology company focusing on communications, electronics and life sciences. From January 1994 to January 1998, Mr. Carney was marketing manager of the integrated circuit division at Hewlett-Packard Company. From November 1982 to January of 1994, Mr. Carney held various marketing management positions at Hewlett-Packard including a three year international assignment from May 1987 to May 1990 as the Japan marketing center manager for Hewlett-Packard’s integrated circuit products group.

Edward M. Boule has served as our vice president, Asia Pacific sales since January 2003. Mr. Boule served as our vice president, foundry partnerships from August 2001 to January 2003, and as our director of Japan operations from August 1999 to August 2001. From October 1995 to April 1999, Mr. Boule was director and vice president of sales for AKM Semiconductor Inc., a subsidiary of Asahi Kasei Microsystems specializing in semiconductor manufacturing.

J. Callan Carpenter has served as our vice president and general manager, analog/mixed-signal business unit since March 2003. From March 1998 to March 2003, Mr. Carpenter served as president, CEO and Director of Silicon Metrics Corporation, a company specializing in semiconductor design and verification software. From December 1997 to March 1998, Mr. Carpenter served as vice president of marketing for Ventix Systems, Inc., an enterprise automation software company. From May 1997 to December 1997, Mr. Carpenter provided

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independent consulting services for several software companies. From January 1990 to April 1997, Mr. Carpenter held various marketing and managerial positions with Mentor Graphics Corporation, including the position of vice president of corporate marketing from January 1995 to April 1997.

ITEM 2.    PROPERTIES

Our principal administrative and technical offices occupy 54,489 square feet in Sunnyvale, California pursuant to a lease that expires in August 2008. In addition, we lease administrative, technical and field support offices in seven cities throughout the world. The administrative, technical and field offices range from small executive offices to a 35,290 square foot facility. Lease terms range from month-to-month on certain executive offices to 3 years on certain direct leases. Our principal administrative, technical and field support facilities are in Sunnyvale, California; San Diego, California; Boston, Massachusetts; Bangalore, India; Tokyo, Japan; Paris, France and Singapore. We are continually evaluating the adequacy of existing facilities and additional facilities in new cities and we believe that suitable additional space will be available in the future on commercially reasonable terms as needed.

ITEM 3.    LEGAL PROCEEDINGS

We are not a party to any legal proceedings.

We have been notified by Broadcom Corporation that it is requesting indemnification from NurLogic (the successor entity of NurLogic is now one of our wholly owned subsidiaries) because a complaint was filed against Broadcom by STMicroelectronics, Inc. in November 2002 in the United States District Court for the Eastern District of Texas alleging that some of Broadcom’s products infringe several patents owned by STMicroelectronics. STMicroelectronics is seeking both an injunction against Broadcom and monetary damages. We have recently been further notified by Broadcom that it is requesting indemnification from NurLogic because a complaint was filed against Broadcom by Agere Systems Inc. in August 2003 in the United States District Court for the Eastern District of Pennsylvania, alleging that some of Broadcom’s products infringe several patents owned by Agere. We have received notice from Broadcom regarding one Agere patent that may relate to the technology licensed by NurLogic. Agere is seeking both an injunction against Broadcom and monetary damages.

We believe that the complaint brought by STMicroelectronics is without merit with respect to technology licensed by NurLogic to Broadcom. We are in the process of evaluating Agere’s claims and we believe that we have meritorious defenses with respect to the technology licensed by NurLogic to Broadcom. However, there can be no assurance that the courts will find that the patents asserted by STMicroelectronics and Agere are invalid or that the technology licensed by NurLogic does not infringe such patents.

Whether or not the asserted patents are valid and whether or not a court finds that Broadcom’s or NurLogic’s products infringe, the investigation and resolution of these indemnity claims and any related litigation could be expensive and could consume substantial amounts of management time and attention.

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PART II

Price Range of Common Stock

Our Common Stock has been quoted on the NASDAQ National Market under the symbol “ARTI” since our initial public offering on February 3, 1998. Prior to such time, there was no public market for our Common Stock. The following table sets forth for the periods indicated the high and low sale prices per share of our Common Stock as reported on the NASDAQ National Market.