Floorplanning is the process of identifying structures that should be placed close together, and allocating space for them in such a manner as to meet the sometimes conflicting goals of available space (cost of the chip), required performance, and the desire to have everything close to everything else.
Within the Xilinx chips it is often the case that the smallest area design is also the highest performance design. This flies in the face of many design methodologies, where area and speed are considered to be things that should be traded off against each other.
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