I just got out of a meeting with Charles Byers, one of my favorite chip industry execs. Mr Byers is Director of Worldwide Brand Management at TSMC, the world's largest chipmaker but one that doesn't build a single chip for itself.

TSMC is a chip foundry, it makes chips for others. Foundries enable hundreds of chip company startups to be formed because they don't need to have their own chip production facilities. Small teams of designers at what are called "fabless" chip companies, get access to cutting edge chip manufacturing production lines.

With chip fabs costing about $3.5bn a piece, foundries provide a way to share manufacturing costs. There would be very little innovation going on, very few consumer gadgets made without foundries. And each new gizmo would cost thousands of dollars.

Meeting with Mr Byers always provides a good  insight into the global chip business because of TSMC's incredible size. Its relationships with thousands of customers show what types of chips are being designed and for which markets.

Here are some trends: Chips for consumer applications have become about 50 per cent of TSMC's business. About three years ago, the chip industry was equally divided between consumer, computer industry, and the communications industry. It's always good to have a broad range of customers to iron out boom and busts in different sectors.

Although there are cross-over products that fit into several categories, the trend shows that the chip industry has increasingly more of its eggs in one basket: a basket owned by the fickle consumer.

"Do you know the demographic that best represents the consumer chip market?" Mr Byers asks. "The 15 year old girl. She has a couple of iPods, digital camera, computer, cell phone, and a couple of games consoles."

But why is it a girl?  Boys have those things too, I ask. "Girls have better access to their father's money," he replies. My daughter is 12, I'd better watch out!

The potential volatility of consumer markets is one challenge, another one facing TSMC is in its ability to run its production lines as close to full capacity as possible--and run them all day, all night, all the time. That's because the massive fixed cost of fabs means that you lose a huge amount of money if you don't run your lines at near full tilt. 

An additional benefit of full production lines is that you are faster in being able to tune-up your production machinery to produce high percentages of working chips. With chip feature sizes measured in atoms, the tiniest slipup in the many hundreds of manufacturing steps,  produces a dud chip. You can't even use it for a doorstop :-)

This is why TSMC is now building what it terms "Giga Fabs." These cost about $10bn each. Each Giga Fab is essentially three fabs in one. But why?

A Giga Fab provides savings of about half a billion dollars in building costs, says Mr Byers.  But the much greater benefit is in being able to qualify three fabs at once for volume production.

That means faster time to market on high-end advanced chip designs. And in the chip foundry business, that's exactly where the profit margins are at their most lucrative.