A highly integrated chip that contains all the components comprising a controller. Typically this includes a CPU, RAM, some form of ROM, I/O ports, and timers. Unlike a general-purpose computer, which also includes all of these components, a microcontroller is designed for a very specific task -- to control a particular system. As a result, the parts can be simplified and reduced, which cuts down on production costs.
Microcontrollers are sometimes called embedded microcontrollers, which just means that they are part of an embedded system-- that is, one part of a larger device or system.
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