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A microcontroller is basically a small low cost computer on a chip and usually includes:
-A microprocessor (CPU-8/16 bit)
-A small amount of RAM
-Programmable ROM and/or flash memory
-Parallel and/or serial generators
-Timers and signal generators
-Analog to Digital (A/D) and /or Digital to Analog (D/A) Converter.
Now let me take an example of an ATMEGA8 microcontroller which i used for my mini project.
The microprocessor is a part of the microcontroller that does all the processing and calculations. For example: the Intel chip in you computer is a microprocessor. The ATMEGA8 has an 8-bit microprocessor doing all the processing in it.
The ATMEGA8 consists of a 1KB(1024 b) SRAM that is used while executing programs.
A very important part of a microcontroller is its memory. ATMEGA8 has a flash memory of 8KB, which is more that enough for our purpose.
A timer is a very essential part of a microcontroller that keeps track of the time. Its not a simple clock to check time but used as a reference to guide various programs.
A/D and D/A converters as they seem are just used to convert analog signals to digital and digital to analog respectively.
Below is a schematic diagram of a ATMEGA8 microcontroller.
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