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For mobile video applications, the required storage and bandwidth of frame memory play crucial roles. Reducing the accesses and the size of frame memory can decrease area and cost, as well as power consumption. Current video-coding standards can reach high compression efficiency but demand large volumes of computations and storage requirements. Hence, it is hard for these coding standards to be embedded into an H.264 decoder. In this brief, a novel embedded lossy compression scheme is proposed. With a compression ratio at 2, it compresses a 4 × 2 size block into 32 bit with peak-signal-to-noise-ratio loss of 1.27 ~ 3.94 dB compared with H.264. A pipelined architecture is also proposed to realize both the compressor and the decompressor in 2 cycles and 1 cycle, respectively. This cost-effective solution requires a gate count of 4.9 k and power consumption of 244 μW in a 90-nm standard complementary metal-oxide-semiconductor process, making it very suitable for mobile video applications.