Why do we need two memory banks in 8086 but just one single memory bank in 8088?
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The 8086 is a 16-bit processor with a 16-bit memory bus. That requires a memory subsystem that can deliver 16-bits at a time, probably built using two sets of 8-bit memory chips.
The 8088 uses an 8-bit memory bus, to make it cheaper. It was designed to save on the minimum number of chips needed to build a system.