Taiwan Semiconductor Manufacturing Company (TSMC) expects sales generated from 10nm process technology to account for 10% of its overall revenues for 2017.

Shipments of TSMC's 10nm chips are set to boom starting the third quarter of 2017, said company co-CEO CC Wei, adding that the process as a ratio of company revenues will climb to 10% in the third quarter from only 1% in the second. The proportion will grow further in the fourth quarter.

TSMC forecast consolidated revenues for 2017 will increase 5-10% from the record high of NT$947.94 billion set in 2016.

TSMC's revenues registered sequential declines in the first and second quarters of 2017. Disappointing smartphone demand, inventory adjustments at fabless customers, and appreciation of the NT dollar led to the revenue decreases, according to TSMC co-CEO Mark Liu.

With customers starting to replenish inventory and smartphone demand picking up, TSMC expects to post an about 15.7% sequential increase in third-quarter revenues, said Liu. However, gross margin for the quarter will slide to 48.5-50.5% from 50.8% in the second quarter, as a result of the foundry's 10nm chip production ramp-up, Liu indicated.

In addition, Liu disclosed TSMC's semiconductor market outlook for 2017 has been revised to 6% growth from 4%. The estimate excludes the memory chip sector.

TSMC also revised its foundry market growth forecast for 2017 to 6% from 5%, Liu said. The company's target of 5-10% growth in 2017 consolidated revenues remains unchanged, Liu continued. The estimate is according to TSMC's revenues in US dollars.

TSMC's capex for 2017 will be about 10% higher than the US$10.19 billion spent in 2017, Liu indicated.

As for TSMC's 7nm process development, volume production is set to kick off in 2018. The company has had 13 7nm tape-outs for mobile devices, with about half of the tape-outs for HPC designs, Wei said. The process has also received positive feedback from customers specializing in the development of mid-range and high-end smartphone chips, according to Wei.

TSMC has also been engaged in R&D for an improved version of the 7nm process using extreme ultraviolet (EUV), which will be ready for volume production in 2019, said Wei. As for 5nm, risk production is scheduled to start in the first quarter of 2019, Wei indicated.