TSMC expects to post revenues of between US$15.4 billion and US$15.7 billion in the fourth quarter of 2021, which is a 4.5% sequential increase at the midpoint. Gross margin and operating margin for the quarter are estimated at 51-53% and 39-41%, respectively.
Based on its sales guidance for the fourth quarter, TSMC narrowed its revenue growth outlook this year to 24%. The pure-play foundry also reiterated its capex target for 2021 of a record-high US$30 billion.
TSMC reported net profits increased 16.3% sequentially and 13.8% on year to NT$156.26 billion (US$5.56 billion) in the third quarter of 2021, with EPS coming to NT$6.03, or US$1.08 per ADR unit.
TSMC posted consolidated revenue of NT$414.67 billion in the third quarter, representing increases of 11.4% on quarter and 16.3% from a year earlier. In US dollars, revenue came to US$14.88 billion, which increased 22.6% on year and 12% sequentially. The results came within the company's guidance range of US$14.6 billion to US$14.9 billion.
TSMC credited its 11.4% sequential revenue increase in the third quarter to strong demand for its industry-leading 5nm and 7nm technologies driven by all four growth platforms, which are smartphone, HPC, IoT and automotive-related applications.
TSMC saw its gross margin and operating margin arrive at 51.3% and 41.2%, respectively, in the third quarter, with the operating margin slightly beating its estimate given in July.
TSMC disclosed 5nm chip shipments accounted for 18% of the foundry's total wafer revenue in the third quarter, while 7nm chip shipments grew as a proportion of revenue to 34% from 31% in the prior quarter. Advanced technologies, defined as 7nm and under nodes, accounted for 52% of TSMC's total wafer revenue in the third quarter of 2021.
TSMC saw revenue generated from orders for smartphones increase 15% sequentially to account for 44% of its total wafer revenue in the third quarter, while revenue from orders for HPC products grew 9% on quarter to account for 37% of the revenue. Revenue generated from the IoT, automotive, digital consumer electronics and others accounted for 9%, 4%, 3% and 3%, respectively, during the quarter.
North America remains the largest market of TSMC accounting for 65% of the foundry's total wafer revenue in the third quarter, while Asia Pacific slid as a proportion of total wafer revenue to 13%, down from 15% in the prior quarter. China, as a proportion of TSMC's total wafer revenue, stayed flat sequentially but fell 11pp year-on-year to 11% in the third quarter of 2021.