Abstract: : The gap which exists between the current state of integrated circuit technology and its use in military systems is broadly discussed and analyzed. Two categories of cost are analyzed: the direct life cycle cost of the integrated circuit assemblies (development, acquisition, spares and repairs), and the systems support life cycle costs. The dependence of these costs on the physical characteristics of the integrated circuits is discussed. The economic and physical characteristics of several types of integrated circuits are reviewed, particularly as they depend on the level of circuit integrations, and the effect of these characteristics on the total life cycle cost of several classes of military systems is examined. The potential for cost avoidance or performance improvement through the application of current integrated circuit technology to military systems is estimated as several billion dollars for weapons systems and intelligence gathering systems which are now in advanced development or in the early stage of production. Various steps that might be taken by DoD to partially achieve these cost reductions are discussed, the chief one being a study of the feasibility of designing a family of integrated circuits which could replace a significant fraction of the circuits which would otherwise be used.