In its simplest state the Atmega328 can be made to work with a 16 MHz Crystal and 2 small capacitors or even just with a ceramic resonator. Load that with an Arduino bootloader and you have a small arduino compatible microcontroller.
This article describes the building of such a device, on strip board, that can be put together for just a few Euro:
Needed:
1x Atmega 328 at € 3.40
3x 100nF ceramic capacitors € 0.09
2x 22pF ceramic capacitor € 0.12
1x 16 MHz Crystal € 0.40
1x 100uF 10 V electrolytic capacitor € 0.12
1x 100uF 25 V electrolytic capacitor € 0.11
1x 1kOhm Resistor € 0.10
1x 10kOhm Resistor € 0.10
1x 330Ohm Resistor € 0.10
1x LED Red € 0.12
1x LED Green € 0.12
pinheaders ca 33 pins € 0.45
1x 7805 € 0.30
stripboard 20x 8
2x 14 pins IC foot € 0.15




