Signal decoding and modulation processing system for capacitive stylus

A signal decoding and modulation processing system for capacitive stylus is disclosed. The system includes a micro controller unit (MCU) and a digital processing unit. The digital processing unit is electrically connected to the MCU. The digital processing unit includes a decoding module and a modulating module. The decoding module is configured to decode an input signal from a touch panel, so as to generate a decoded input content. Then, the MCU generates a feedback data according to the decoded input content. The modulating module receives the feedback data from the MCU and performs a modulation process accordingly for generating a differential binary phase shift keying (DBPSK) output signal, which is sent back to the touch panel.