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This paper presents a new VLSI architecture for sub-pixel motion estimation in H.264/AVC encoder. It is based on an interpolation-free algorithm that causes a high level reduction on memory requirement, hardware resources and computational complexity. A high performance, bit-serial pipeline architecture is proposed for quarter-pixel accurate motion estimation which supports real-time H.264 encoding. Due to the bit-serial, modular and reusable architecture, it provides significant improvement in area cost (at least 39%) and increases the macroblock processing speed almost 6 times when compared with the previous designs. The proposed architecture is suitable for portable multimedia devices where the memory and power consumption are limited.