A decoupling capacitor (DeCap) is used in power managed designs to decouple a power domain from the effects of power switching in a related domain.
A switching sub-circuit (a power domain or a voltage island) can mess up the power supply line upon which other sub-circuits or domains depend upon. When a load switches into a circuit, the circuit tries to increase its current draw but the inductance associated with power supply line will act against this change. This change is opposed by lowering of the voltage the power supply line provides. This voltage may be powering other domains which may malfunction because of the drop. All domains that depend on this power supply line will get affected. The changes are temporary since the inductance eventually loses the battle but these changes may cause the design to malfunction.
A DeCap connected to the supply power line helps decouple other domains from these sudden changes by stabilizing the supply needs through its stored charge. When the load is switched out, the DeCap is charged and becomes ready to supply when supply line balks at supplying during the switching in of a new load. By the time DeCap discharges, the main supply should be stabilized. A careful analysis of load requirements goes into the design of DeCaps.
Power managed designs require a host of structural verification checks to ensure appropriate level shifters, isolators, and retention cells are present in the design along with correct power connectivity to various domains and specials cells. Ensuring presence of DeCaps is another one of these checks that help ensure presence of appropriate protection for the load switching events in the low power designs that typically contain several power modes as appropriate for different applications. And just like other structural checks, it can help avoid a potential re-spin of the design.