  Integrated sensing and communication (ISAC) emerges as a promising technology
for B5G/6G, particularly in the millimeter-wave (mmWave) band. However, the
widely utilized hybrid architecture in mmWave systems compromises multiplexing
gain due to the constraints of limited radio frequency chains. Moreover,
additional sensing functionalities exacerbate the impairment of spectrum
efficiency (SE). In this paper, we present an optimized beam pattern
modulation-embedded ISAC (BPM-ISAC) transceiver design, which spares one RF
chain for sensing and the others for communication. To compensate for the
reduced SE, index modulation across communication beams is applied. We
formulate an optimization problem aimed at minimizing the mean squared error
(MSE) of the sensing beampattern, subject to a symbol MSE constraint. This
problem is then solved by sequentially optimizing the analog and digital parts.
Both the multi-aperture structure (MAS) and the multi-beam structure (MBS) are
considered for the design of the analog part. We conduct theoretical analysis
on the asymptotic pairwise error probability (APEP) and the Cram\'er-Rao bound
(CRB) of direction of arrival (DoA) estimation. Numerical simulations validate
the overall enhanced ISAC performance over existing alternatives.
