I know there is already pre-made board exist like DFPlayer etc. but I am designing my own circuit with arduino and want to mp3 playback function with serial communication so I can read and play songs from sd-card etc.
any Idea of any existing np3 cheap IC that can also do communication with arduino?
The SparkFun MP3 board uses the [u]VS1053[/u].
It's about $12 USD. That's the 1st one I found. I'm not sure what you mean by "cheap". These are advanced-complex chips and if you build your own board the costs are going to add-up.
WHy not just use the same components on the DFPlayer Mini boards?
YX5200 chip.. and whatever amp they use (I forget..but its posted here for sure).. with links to purchase BOTH..
The same components were used in the DIY'ino (light saber based project) board.. they just took the components and added to their custom board.
My understanding is that the SD card NOT be used for other things though (saving/reading/writing to text files for example)
You should check if these chips are microcontrollers or contain microcontrollers, in which case you'll need the firmware too, which is a big issue if its not an open source product (and you'll need the right toolchain and
in-circuit programmer, etc etc.)
I can use STM32 instead of 328P and its going to be one single and cheap solution, by looking at link below I think it supports MP3 builtin. but I cant find any resources.
I can use STM32 instead of 328P
So its not going to be an Arduino problem anymore. Why not try the STM forum?
but I cant find any resources.
I'm not sure what kind of "resources" you're looking for, but if you are not using the Arduino, or a single-board-computer you'll generally need a development board, a software development kit, and probably a programmer. (I mean a chip-programmer device... I assume you are the software developer. 
). And, you're in a different world with more-difficult, more time consuming, and more-costly product development.
Grumpy_Mike:
So its not going to be an Arduino problem anymore. Why not try the STM forum?
I dont want to leave the arduino world. what I mean is that if I can program stm32 within Arduino (using existing STM32 Libs) and if the STM32 is able to play MP3 files then it becomes easy to do it rather than having to deal with 2 diffrent IC and also the MP3 one dosnt look so common to find. So I was only thinking it as a option if possible. I love arduino environment and I dont want to leave it just change the micro controller.