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We present a methodology for power reduction by instruction/data cache-tag compression for low-power embedded processors. By statically analyzing the code/data memory layouts for the application hot spots, a variety of proposed schemes for effective tag-size reduction can be employed for power minimization in instruction and data caches. The schemes rely on significantly reducing the number of tag bits stored in the tag arrays for cache-conflict identification, thus considerably decreasing the number of active bitlines, sense amps, and comparator cells. We present a set of tag compression techniques and evaluate each of them separately in terms of efficiency and required hardware support. A detailed very large scale integrated implementation has been performed and a number of experimental results on a set of embedded applications is reported for each technique. Energy dissipation decreases of up to 95% can be observed for the tag arrays, implying significant energy reductions in the range of 50% when amortized across the overall cache subsystem.