Emerging trends in the area of digital very large scale integration (VLSI) signal processing can lead to a reduction in the cost of the cochlear implant. Digital signal processing algorithms are repetitively used in speech processors for filtering and encoding operations. The critical paths in these algorithms limit the performance of the speech processors. These algorithms must be transformed to accommodate processors designed to be high speed and have less area and low power. This can be realized by basing the design of the auditory filter banks for the processors on digital VLSI signal processing concepts. By applying a folding algorithm to the second-order digital gammatone filter (GTF), the number of multipliers is reduced from five to one and the number of adders is reduced from three to one, without changing the characteristics of the filter. Folded second-order filter sections are cascaded with three similar structures to realize the eighth-order digital GTF whose response is a close match to the human cochlea response. The silicon area is reduced from twenty to four multipliers and from twelve to four adders by using the folding architecture.