TSMC reported a net income of NT$30.55 billion ($938.2 million) on sales of NT$89.9 billion ($2.76 billion) for the third quarter, ended Sept. 30.

Sales were up 21 percent compared to the second quarter, but down 3 percent compared to the third quarter of 2008, TSMC (Hsinchu, Taiwan) said. Net income was up 25 percent sequentially and flat year-to-year, TSMC said.

Gross margin for the third quarter was 48 percent, operating margin was 36 percent and net margin was 34 percent, TSMC said.

Sixty-seven percent of third quarter revenue was derived from advanced process technologies (0.13 micron and below), TSMC said. Eighteen percent of revenue came from 90-nm process technology, while 31 percent came from 65-nm and 4 percent from 40-nm technology, the company said.

For the fourth quarter, TSMC said it expects revenue to be flat to up slightly, reaching between NT$90 billion and NT$92 billion ($2.77 billion to $2.8 billion). The company said it expects its fourth-quarter gross profit margin to be between 47 and 48.5 percent, with operating profit margin between 35.5 and 37 percent.

In a statement, Lora Ho, TSMC's vice president and chief financial officer, said the company expects demand from computer-related applications to grow strongly in the fourth quarter. But TSMC expects communication applications to pause momentum after two straight strong growth quarters and expects consumer applications to decline following their seasonal pattern.

TSMC also raised its capital expenditure budget for 2009 to $2.7 billion from $2.3 billion, citing stronger demand for 40- and 65-nm technologies. The company said its third-quarter capex spending amounted to $971 million. The company had spent $1.36 billion on capital expenditures year-to-date at the close of the third quarter, it said.

TMSC's total managed capacity stood above 2.4 million 8-inch equivalent wafers in the third quarter, down 1.6 percent from the second quarter, mainly due to capacity migration to advanced nodes, the company said. Managed capacity is expected to increase by 3.6 percent in the fourth quarter, TSMC said.

Revenue from customers based in North America accounted for 70 percent of total third-quarter wafer sales, up from 65 percent in the prior quarter, TSMC said. Sales from Asia Pacific, China, Europe and Japan accounted for 13, 3, 11, and 3 percent of total wafer sales, respectively, the company said.

Revenues from IDM customers accounted for 20 percent of total wafer sales in the third quarter, up from 18 percent in the second quarter, TSMC said.

On Wednesday, No. 2 foundry player United Microelectronics Corp. as well as China's Semiconductor Manufacturing International Corp. posted better-than-expected third-quarter sales, with each reporting capacity utilization levels approaching 90 percent.