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Motion estimation (ME) consumes up to 70% of the entire video encoder's computations and is, therefore, the main encoding-time consuming process. Discrete cosine transform (DCT)-based phase correlation along with dynamic padding (DP) are the recently evolved frequency domain ME (FDME) techniques that promise to efficiently reduce the computational complexity of the ME process. DP uses dynamic padding thresholds to select the proper search area size according to a pre-estimated set of motion vectors (MVs). The main drawbacks of using conventional DP in the frequency domain are two-fold. First, the dynamic thresholds need to be estimated in the pixel (IDCT) domain which increases complexity. Second, the mismatched transformed search area is formed from different successive transformed blocks, which would lead to an inaccurate ME if the search area is not manipulated. In this paper, an efficient low complexity algorithm and high speed architecture are proposed to implement an adaptive manipulation unit engine (MUE). The MUE, the main module of the FDME system, adaptively decides the padding size and forges a matched transformed search area from the successive transformed blocks. Additionally, the proposed utilized dynamic thresholds are efficiently estimated in the frequency domain (FD). The MUE architecture is presented with two different design implementations trading off the VLSI design parameters. Implementation and simulation results project that the proposed MUE, when integrated in a whole FDME system, can perform ME for 60 fps of 4CIF video at 172 MHz.