The wafer alignment system plays a key role in the reduction of product overlay. This reduction allows shrink of current products and tighter overlay design rules on next generation products. Further reduction of product overlay numbers requires continuous research in the field of interaction between wafer mark and alignment sensor. We explain how this research and various IC manufacturing requirements drive wafer alignment system design and how these requirements are met in two new phase-grating based wafer alignment concepts. This paper describes and compares these two new concepts that extend ASML's current ATHENATM alignment system. The first concept we describe is an extension of ATHENATM which uses a smaller alignment illumination beam. The second concept adds a self-referencing interferometer, combined with a high numerical aperture objective. Each concept targets a specific range of performance parameters, such as greater mark layout flexibility and the possibility to use more than two illumination wavelengths. We will show how both concepts clearly add to the existing ATHENATM sensor performance; focus-tilt sensitivity reduces with a factor of 5 to 20 for concept A and B respectively. Both concepts will be further developed.