This paper deals with the use of liquid crystals to visualize the internal electrical behavior of VLSI circuits. The complexity of present VLSI chips requires powerful tools to detect possible defects. For such a purpose, internal contactless testing methods have been developed, such as, electron beam or laser testing, to help identify the precise localization of the electrical defect. The aim of this paper is to describe the liquid crystals test method, used at the IBM COMPEC laboratory for failure analysis, in the localization of defects in an integrated circuit. The electro-optical properties of these materials depend on the electric fields present on the chip surface, thus it has become possible to visualize the path information and to determine the areas where the signal is present. Depending on the applied electric field direction, the molecules can rotate if the E value is higher than a threshold value (0.1 V/μm). The liquid crystal testing apparatus is principally equipped with a laser scan microscope, a word generator which emulates the chip, an image processing station and the equipment necessary for the preparation of the samples. For this test method we have two possible applications: the imaging mode, in order to visualize the presence of the signal on the chip surface, and the probing mode, to determine the temporal evolution of the electric signal in one node of the circuit up to a maximum value of 300 KHz, and to discriminate IC logical levels, up to a maximum value of 3 MHz. The great advantage in the use of the SC ∗ liquid crystals, more than the color, is the response time performance of such a phase. SC ∗ can have a switching time of about 1 μs compared with 1 ms for N. In the future the SA phase will allow a response time better than 100 ns. The advantages of such methods are the production of colored pictures, the use of optical microscopy, testing can be done at atmospheric conditions, the ease of set-up and manipulation and finally the low cost of the equipment used. In the failure analysis laboratory it could represent another alternative to the voltage contrast usually performed with E-beam testing. Moreover the possibility of making a measurement in one node of the circuit in order to obtain the internal signal seems very promising. Some examples with memory products will be discussed.