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Generally, in the telecommunication industry, VLSI implementation is viewed as a means to cost reduction and is attempted only after successively decomposing a system into circuits corresponding to individual printed circuit boards (PCB's). This traditional "circuit-design" approach is unable to cope with and to exploit the potential of VLSI capabilities such as chip density and processing power. The availability of unprecedented processing power and the recognition of "effective endproduct cost" as the true measure for VLSI chip fabrication are leading the change over from integrated circuit design to integrated system design. In this paper, this emerging system design methodology for VLSI implementation and its two elements, system partitioning and performance specification allocation, are illustrated by two design examples; one relating to line-circuit design and the other to a packet-switch design.