Abstract: Among the family of CAD/CAM/CAE, CAD and CAM are morestraight-forward in concept, while CAE covers a wider area and is fastdeveloping. Now CAE has developedfrom numerical computation to simulation, towards a realization of virtualreality with CAE and CAD being closely combined. With the development of FEMand new artificial intelligence algorithms including ANN and GA, notonly detailed designs but alsoglobal designs are supported by CAE. On the basis of a R \& D scheme, CAEis analyzed in terms of its target, physical content and algorithm. Theapplication of finite-element-based and AI-based algorithms in conceptualdesign phase is illustrated. Advances of the modern design optimization arereviewed. The progress of CAE and some important research directions ina near future are discussed.