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Since almost all 16x2 LCD displays support 4-bit mode, and as it seems to be pretty efficient, is there a reason why they have 8-bit modes? I am using a JHD162A display with my Arduino Mega. Since the Mega has a lot of pins unused, I was wondering if I should use the display in 8-bit mode, if that could improve something. I do realize that I might be able to save a bit on the time factor by writing all 8 pins at the same time and not having to wait for the latching, and I just want to know if there's something else.

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The time, as you say, is the only thing I've found. But it's both the added time out to the LCD and from the micro. If you've got a time sensitive application (interrupt latency, etc), sending the full byte frees up the micro.

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