The commodore 116 was released in 1984. It was intented to be an entry-level computer and commodore's answer to other budget machines and the threat of cheap Japanese computers.

The computer is slightly larger than a ZX spectrum with a similar rubbery keyboard. The machine had no sprite capablities and was intented largely as a cheap business machine. It had a MOS 8501 CPU that was about 3 times faster than the C64, but the machine had no other hardware to compete with. It only had 16K of memory, of which 12K was available to the BASIC interperter. The TED chip offered a palette of 128 colors, more than the C64 was capable of, but due to the lack of hardware sprites and RAM, games where not this machines thing.

The MOS 7501 and 8501 was introduced in 1984 and both chips are a variant of the 6510. Where the 6510 had 6 I/O ports, the 7501 and 8501 used all 8. However the CPU omits the pins for the non-maskable interrupt and the clock output. The 7501/8501 were used in the commodore 16, the commodore 116 and the Commodore Plus/4 computers. The I/O ports controlled the Datasette and the CBM Bus interface.

The 7501 and 8501 were functionally equivalent, but the manufacturing process was different. The 7501 was manufactured with HMOS-1, and the 8501 was manufactured with HMOS-2. HMOS-2 used a channel length of 2 microns against the 3 microns of HMOS-1.

The 7360 Text Editing Device or TED, was an integrated circuit made by MOS Technology Inc. It was a video chip that also contained sound generation hardware, DRAM refresh circuitry, interval timers, and keyboard input handling. It was specifically designed for the Commodore Plus/4 and the Commodore 16.

The video capabilities provided by TED were basically a subset of those in the VIC-II chip. The TED supports five video modes:

• 40x25 Text Mode, 8x8 pixel characters
• Multicolor text (4x8 pixels per character, double pixel width)
• Extended background color mode (8x8 pixels per character)
• 160x200 Multicolor Graphics
• 320x200 Hi-Res graphics