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The purpose of our work has been to evaluate the practicality of using a 16-bit floating point representation to store the intermediate sample values and other data in memory during the decoding of MP3 bit streams. A floating point number representation offers a better trade-off between dynamic range and precision than a fixed point representation for a given word length. Using a floating point representation means that smaller memories can be used which leads to smaller chip area and lower power consumption without reducing sound quality. We have designed and implemented a DSP processor based on 16-bit floating point intermediate storage. The DSP processor is capable of decoding all MP3 bit streams at 20 MHz and this has been demonstrated on an FPGA prototype.