Integrated circuit (IC) production is critically dependent on characterization and failure analysis (FA) [l]. Experiment evaluation, technology qualification, yield and reliability learning, and time-to-market are driven by rapid and accurate FA Testing and fault isolation are essential in identifylng electrical faults and in localizing them to regions small enough to be examined by highresolution electron and scanning-probe microscopes. This presentation introduces IC characterization and failure analysis, discusses their roles in manufacturing, and examines limitations imposed by shrinking features, lower stpply voltages, and smaller design margins. R&D needs are also projected based on the CMOS IC technology roadmap [l].