DARPA's VLSI Project provided research funding to a wide variety of university-based teams in an effort to improve the state of the art in microprocessor design, then known as VLSI. Although little known, notably in comparison to their work on what became the internet, the VLSI Project is likely one of the most influential research projects in modern computer history. Its offspring include the RISC processor concept, many of the CAD tools still in use today, 32-bit graphics workstations, fabless design houses and its own fab, MOSIS. A similar DARPA project partnering with industry, VHSIC, is generally considered to have had little or no impact.
The Project was the brainchild of Caltech professor Carver Mead and Xerox PARC programmer Lynn Conway in the late 1970s. At the time microprocessor design was plateauing at the 100,000 transistor level because the tools available to the designers were simply unable to deal with more complex designs. 16-bit and 16/32-bit designs were coming to market, but beyond that seemed too difficult and expensive to contemplate. Mead and Conway felt that there was no theoretical problem impeding progress, simply a number of practical ones, and set about solving these in order to make much more complex designs possible.
One of the primary efforts under VLSI was the creation of the hardware and software needed to automate the design process, which at that point was still largely manual. For a design containing hundreds of thousands of transistors, there was simply no machine short of a supercomputer that had the memory and performance needed to work on the design as a whole.
To address this problem and allow "average" companies to use automated tools, VLSI funded the Geometry Engine and Pixel-Planes projects at Stanford University and University of North Carolina at Chapel Hill (respectively) to create suitable graphics hardware at the desktop level. The former evolved into an effort to design a networked CAD workstation, known as the Stanford University Network. This is better known today under its acronym, "SUN", as in Sun Microsystems, which commercialized the design.
To provide a common software platform to run these new tools, VLSI also funded a Berkeley project to provide a standardized Unix implementation, known today as the Berkeley Software Distribution (BSD). Almost all early workstations used BSD, including designs that evolved into Sun, SGI, Apollo Computer, and others. BSD later spawned several descendants, OpenBSD, FreeBSD, NetBSD, and DragonFlyBSD.
CAD software was an important part of the VLSI effort. This led to major improvements in CAD technology for layout, design rule checking, and simulation. The tools developed in this program were used extensively in both academic research programs and in industry. The ideas were developed in commercial implementations by companies such as VLSI Technology, Cadnetix, and Synopsis.
With these tools in hand, other VLSI funded projects were able to make huge strides in design complexity, sparking off the RISC revolution. The two major VLSI-related projects were Berkeley RISC and Stanford MIPS, both of which relied heavily on the tools developed in previous VLSI projects. To allow design teams to produce test examples, the project also funded the building of their own fabrication facility, MOSIS (Metal Oxide Semiconductor Implementation Service), which received plans electronically. MOSIS remains in operation today.
Another important part of their fabrication process was the development of the multichip wafer, which allowed a single wafer of silicon to be used to produce several chip designs at the same time. Previously a wafer would normally be used to produce a single design, which meant that there was a definite minimum production run one could consider starting up. In contrast the multichip wafer a small batch of a chip could be produced in the middle of a larger run, dramatically lowering the startup cost and prototyping stage.
Direct outcomes of the VLSI Project 
- Sun infosys was an offshoot of the Stanford SUN workstation project
- SGI's workstation design was based on the Geometry Engine concept
- UNC's Pixel-Planes, PixelFlow and WarpEngine series of parallel processor graphics workstations
- Berkeley's RISC turned into SPARC at Sun Microsystems
- Stanford's MIPS are used in many embedded applications such as set-top boxes
- BSD Unix and its derivatives remain a popular system