At 4 bits, you could just have a hard-wired table lookup. Two 4 bit values in, 256 entry table. You can have saturating arithmetic and a post-processing function for free. Somebody must be building hardware like that.
replyLow level software engineers use look up tables.
replyHardware engineers realise that a compiler will almost always find some combination of gates which is smaller/faster than the contents of any table.
A LUT is pretty wasteful. You only have a one bit significand, so the mantissa and sign bits are boolean binops, and the exponent is a 2 bit adder.
replyand so you can at 1-bit too, and the hardware will be even smaller and cheaper
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