Can I use this programmer to program an onboard Atmega168 TQFP chip?
Does the board have to be powered up or the programmer supplies it's own +5v?
Here's what the programmer's schematic looks like.
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You'll have to power the board. The +5V connection shown on the connector comes from your board and is used as a pull-up for the reset signal: the 10k\$\Omega\$ resistor keeps reset high until it is pulled to a low level by the transistor.
The latest PCs are often no longer supplied with an EIA-232 interface. In that case this programmer may be an alternative.
USBASP is the best programmer and is very fast as compared to Serial ISP Programmer. I recommend you to use this one. Specially for big size Flash Microcontrollers.
Here is the link of USBasp