In order to understand FIFO design, one needs to understand how the FIFO pointers work. The write pointer always points to the next word to be written; therefore, on reset, both pointers are set to zero, which also happens to be the next FIFO word location to be written. On a FIFO-write operation, the memory location that is pointed to by the write pointer is written, and then the write pointer is incremented to point to the next location to be written.
Similarly, the read pointer always points to the current FIFO word to be read. Again on reset, both pointers are reset to zero, the FIFO is empty and the read pointer is pointing to invalid data (because the FIFO is empty and the empty flag is asserted). As soon as the first data word is written to the FIFO, the write pointer increments, the empty flag is cleared, and the read pointer that is still addressing the contents of the first FIFO memory word, immediately drives that first valid word onto the FIFO data output port, to be read by the receiver logic. The fact that the read pointer is always pointing to the next FIFO word to be read means that the receiver logic does not have to use two clock periods to read the data word. If the receiver first had to increment the read pointer before reading a FIFO data word, the receiver would clock once to output the data word from the FIFO, and clock a second time to capture the data word into the receiver. That would be needlessly inefficient.
The FIFO is empty when the read and write pointers are both equal. This condition happens when both pointers are
reset to zero during a reset operation, or when the read pointer catches up to the write pointer, having read the last word from the FIFO.
A FIFO is full when the pointers are again equal, that is, when the write pointer has wrapped around and caught up
to the read pointer. This is a problem. The FIFO is either empty or full when the pointers are equal, but which?
One design technique used to distinguish between full and empty is to add an extra bit to each pointer. When the write pointer increments past the final FIFO address, the write pointer will increment the unused MSB while setting the rest of the bits back to zero as shown in Figure (the FIFO has wrapped and toggled the pointer MSB). The same is done with the read pointer. If the MSBs of the two pointers are different, it means that the write pointer has wrapped one more time that the read pointer. If the MSBs of the two pointers are the same, it means that both pointers have wrapped the same number of times.
Using n-bit pointers where (n-1) is the number of address bits required to access the entire FIFO memory buffer, the FIFO is empty when both pointers, including the MSBs are equal. And the FIFO is full when both pointers, except the MSBs are equal.