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The commercial deployment of LTE Release 8 is gaining significant momentum all over the globe, and LTE is evolving to LTE-Advanced, which offers various new features to meet or exceed IMT-Advanced requirements. Since LTE-Advanced targets ambitious spectral efficiency and peak throughput, it poses tremendous system design challenges to operators and manufacturers, especially for mobile terminals. This article discusses modem design issues related to carrier aggregation, enhanced ICIC for HetNet, detection of eight-layer transmission, reference signals for enhanced multi-antenna support, and HARQ buffer management. We provide an overview of technical challenges and sketch the perspectives for tackling them to exploit the full benefits of the LTE-Advanced system.