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Faced with increasing technical and commercial challenges from the Far East, many U.S. semiconductor manufacturers have been directing their efforts toward the Application-Specific Integrated Circuit (ASIC) or custom integrated circuit marketplace. This market is flourishing because advances in technologies such as gate arrays and standard cells now make it significantly easier to obtain system cost and performance advantages by integrating nonstandard functions on silicon. They are attractive to U.S. manufacturers because they place a premium on sophisticated design tools, familiarity with customer needs and applications, and fast turn-around fabrication. These are areas where U.S. manufacturers believe they have an advantage and, consequently, they believe they will not suffer from the severe price/manufacturing competition encountered in conventional high-volume semiconductor products. In the past, automation was often considered viable only for high-volume manufacturing, but automation becomes a necessity in the new ASIC environment. ASIC requirements for increased product variability, strict delivery schedules, and the need to guarantee acceptable yields at the individual wafer level (as opposed to yields averaged over large lots) are the areas which automation must address. These challenges, combined with the need for more efficient and contamination-free production environments, are certain to stress the resources of even the most competent companies. This paper explores some challenges which must be met before automated custom device manufacturing can be successful and outlines the role automation will play in helping to meet these challenges.