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We consider the gate matrix layout problem for VLSI circuits, which is known to be NP-complete. We present an efficient algorithm for determining whether two tracks suffice. For the general problem of minimizing the number of tracks (and, hence, the area) needed, we design an attractive dynamic programming formulation to guarantee optimality. We also investigate the performance of fast heuristic algorithms published in the literature and demonstrate that there exist families of problem instances for which the ratio of the number of tracks required by these heuristics to the optimal value is unbounded. Moreover, we show that this result holds for any on-line layout algorithm. We additionally prove that, unless P = NP, no polynomial-time layout algorithm can ensure that the number of tracks it requires never exceeds k plus the optimum, for any constant k.