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Embedded block coding with optimized truncation (EBCOT) is the most important technology in the latest image-coding standard, JPEG 2000. The hardware design of the block-coding engine in EBCOT is critical because the operations are bit-level processing and occupy more than half of the computation time of the whole compression process. A general purpose processor (GPP) is, therefore, very inefficient to process these operations. We present detailed analysis and dedicated hardware architecture of the block-coding engine to execute the EBCOT algorithm efficiently. The context formation process in EBCOT is analyzed to get an insight into the characteristics of the operation. A column-based architecture and two speed-up methods, sample skipping (SS) and group-of-column skipping (GOCS), for the context generation are then proposed. As for arithmetic encoder design, the pipeline and look-ahead techniques are used to speed up the processing. It is shown that about 60% of the processing time is reduced compared with sample-based straightforward implementation. A test chip is designed and the simulation results show that it can process 4.6 million pixels image within 1 s, corresponding to 2400 × 1800 image size, or CIF (352 × 288) 4 : 2 : 0 video sequence with 30 frames per second at 50-MHz working frequency.