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Let's look at a concrete example.

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This graph shows the voltage transfer characteristic
for a particular device and we're wondering

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if we can use this device as a combinational
inverter.

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In other words, can we pick values for the
voltage thresholds V_OL, V_IL, V_IH and V_OH

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so that the shown VTC meets the constraints
imposed on a combinational device?

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An inverter outputs a digital 1 when its input
is a digital 0 and vice versa.

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In fact this device does produce a high output
voltage when its input voltage is low, so

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there's a chance that this will work out.

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The lowest output voltage produced by the
device is 0.5V, so if the device is to produce

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a legal digital output of 0, we have to choose
V_OL to be at least 0.5V.

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We want the inverter to produce a valid digital
0 whenever its input is valid digital 1.

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Looking at the VTC, we see that if the input
is higher than 3V, the output will be less

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than or equal to V_OL, so let's set V_IH to
3V.

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We could set it to a higher value than 3V,
but we'll make it as low as possible to leave

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room for a generous high noise margin.

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That takes care of two of the four signal
thresholds, V_OL and V_IH.

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The other two thresholds are related to these
two by the noise margin N as shown by these

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two equations.

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Can we find a value for N such that V_OUT
>= V_OH when V_IN <= V_IL?

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If we chose N = 0.5V, then the formulas tell
us that V_IL = 1V and V_OH = 3.5V.

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Plotting these thresholds on the graph and
adding the forbidden regions, we see that

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happily the VTC is, in fact, legal!

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So we can use this device as a combinational
inverter if we use the signaling specification

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with V_OL = 0.5V, V_IL = 1V, V_IH = 3V and
V_OH = 3.5V.

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We're good to go!