This paper introduces new applications and design trade-offs anticipated for free-space optical interconnections of VLSI chips. New implementations of VLSI functions are described that use the capability of making optical inputs at any point on a chip and take advantage of greater flexibility in on-chip signal routing. These include n-port addressable memories, CPU clock phase distribution, hardware multipliers, and dynamic memory refresh, as well as enhanced testability. Fault tolerance and production yields may be improved by reprogramming the optical imaging system to circumvent defective elements. These attributes, as well as those related to performance alone, will affect the design methodology of future VLSI ICs. This paper focuses on identifying the design issues, their possible solutions, and their impact on VLSI design tech-niques and, finally, presents some preliminary measurements on various sys-tem components.