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In coming applications a further increase of diversity and higher complexity of electronic systems is expected. As a consequence it will be an increasingly challenging and time consuming task to design these systems. Although various new components are coming up, the problem of increasing cost for system design, debugging and verification is generally not addressed by conventional technology developments. A new concept to face these challenges will be presented. It is based on the constitution of a system by miniaturised modules, each representing a complete functionality like system control, data storage or sensing. The modules are planar System-in-Packages with embedded active and passive components, having typically 4 contacts on bottom and top. Besides the hardware an integral part of each module is its firmware, a small piece of software which controls a basic functionality, e. g. sensor data filtering and the communication with other modules. The realisation of a Smart Pixel SiP with I2C bus interface and embedded components as well as the design of a modular sensor system will be described. The data communication between modules is also realised by an I2C bus. By combining these modules in different ways, various systems can be realised. The capabilities and challenges of such systems will be discussed.