We at CRC have designed and LSI Logic has manufactured two test chip designs;these were used to investigate the characteristics of actual production defects and the effectiveness of various test techniques in detecting their presence. This paper presents a characterization of the defects that shows that very few defective chips act as if they had a single-stuck fault present and that most of the defects cause sequence-dependent behavior. A variety of techniques are used to reduce the size of test sets for digital chips. They typically rely on preserving the single-stuck-fault coverage of the test set. This strategy doesn't guarantee that the defect coverage is retained. This paper presents data obtained from applying a variety of test sets on two chips (Murphy and ELF35) and recording the test escapes. The reductions in test size can thus be compared with the increases in test escapes. The data shows that, even when the fault coverage is preserved, there is a penalty in test quality. Also presented is the data showing the effect of reducing the fault coverage. Techniques studied include various single-stuck-fault models including inserting faults at the inputs of complex gates such as adders, multiplexers, etc. This technique is compatible with the use of structural RTL netlists. Other techniques presented include compaction techniques and don't care bit assignment strategies.