--- a/hotspot/src/share/vm/c1/c1_Optimizer.cpp	Tue Dec 20 16:56:50 2011 +0100
+++ b/hotspot/src/share/vm/c1/c1_Optimizer.cpp	Thu Dec 22 10:55:53 2011 +0100
@@ -125,9 +125,16 @@
   // inlining depths must match
   ValueStack* if_state = if_->state();
   ValueStack* sux_state = sux->state();
-  while (sux_state->scope() != if_state->scope()) {
-    if_state = if_state->caller_state();
-    assert(if_state != NULL, "states do not match up");
+  if (if_state->scope()->level() > sux_state->scope()->level()) {
+    while (sux_state->scope() != if_state->scope()) {
+      if_state = if_state->caller_state();
+      assert(if_state != NULL, "states do not match up");
+    }
+  } else if (if_state->scope()->level() < sux_state->scope()->level()) {
+    while (sux_state->scope() != if_state->scope()) {
+      sux_state = sux_state->caller_state();
+      assert(sux_state != NULL, "states do not match up");
+    }
   }
 
   if (sux_state->stack_size() <= if_state->stack_size()) return;

--- /dev/null	Thu Jan 01 00:00:00 1970 +0000
+++ b/hotspot/test/compiler/7123108/Test7123108.java	Thu Dec 22 10:55:53 2011 +0100
@@ -0,0 +1,60 @@
+/*
+ * Copyright (c) 2011, Oracle and/or its affiliates. All rights reserved.
+ * DO NOT ALTER OR REMOVE COPYRIGHT NOTICES OR THIS FILE HEADER.
+ *
+ * This code is free software; you can redistribute it and/or modify it
+ * under the terms of the GNU General Public License version 2 only, as
+ * published by the Free Software Foundation.
+ *
+ * This code is distributed in the hope that it will be useful, but WITHOUT
+ * ANY WARRANTY; without even the implied warranty of MERCHANTABILITY or
+ * FITNESS FOR A PARTICULAR PURPOSE.  See the GNU General Public License
+ * version 2 for more details (a copy is included in the LICENSE file that
+ * accompanied this code).
+ *
+ * You should have received a copy of the GNU General Public License version
+ * 2 along with this work; if not, write to the Free Software Foundation,
+ * Inc., 51 Franklin St, Fifth Floor, Boston, MA 02110-1301 USA.
+ *
+ * Please contact Oracle, 500 Oracle Parkway, Redwood Shores, CA 94065 USA
+ * or visit www.oracle.com if you need additional information or have any
+ * questions.
+ *
+ */
+
+/**
+ * @test
+ * @bug 7123108
+ * @summary C1 crashes with assert(if_state != NULL) failed: states do not match up
+ *
+ * @run main/othervm -Xcomp Test7123108
+ */
+
+public class Test7123108 {
+
+    static class Test_Class_0 {
+        final static byte var_2 = 67;
+        byte var_3;
+    }
+
+    Object var_25 = "kgfpyhcms";
+    static long var_27 = 6899666748616086528L;
+
+    static float func_1()
+    {
+        return 0.0F;
+    }
+
+    private void test()
+    {
+        "dlwq".charAt(((short)'x' > var_27 | func_1() <= (((Test_Class_0)var_25).var_3) ? true : true) ? Test_Class_0.var_2 & (short)-1.1173839E38F : 'Y');
+    }
+
+    public static void main(String[] args)
+    {
+        Test7123108 t = new Test7123108();
+        try {
+            t.test();
+        } catch (Throwable e) { }
+    }
+}