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So I am attempting to tie a real time clock (DS1302) into an Arduino and then eventually a AVR chip directly. From all of the schematics I have seen, it appears a crystal is required. I read through the datasheet (above) and did not get the feeling you can run the chip without one.

Am I mistaken? I hope so as I would just like to hook this up to the Arduino and also have a coin cell battery back it up. Does this IC require a crystal or does it have its own built on board?

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Yep, it needs a 32768 Hz crystal clock.

The DS1302 uses an external 32.768kHz crystal. The oscillator circuit does not require any external resistors or capacitors to operate.

App. Note 58: Crystal Considerations with Dallas Real-Time Clocks (RTCs)

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It pays off to read a datasheet thoroughly. On page 2 this typical application circuit is shown:

enter image description here

This schematic shows no load capacitors, and indeed, the block schematic on page 3 shows that the capacitors are integrated.

Most RTC ICs don't have their crystal on board. I used to think that this had to do with the required size for such low frequency crystals; larger crystals typically resonate at lower frequencies. Case in point: the Maxim DS32kHz, a 32.768 kHz oscillator with integrated crystal comes in a 16-pin package, despite that only 4 pins are used.

However, recently I discovered the Abracon ABS06 32kHz crystal, which is just 2mm x 1.2mm, that's 0805 size!

enter image description here

The real reason for not integrating these small crystals in the RTC's package is probably cost. This crystal costs 10 times what the cylindrical can costs.

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