Qualcomm is set to significantly raise wafer starts at Taiwan Semiconductor Manufacturing Company (TSMC) in the first quarter of 2011, for its baseband chips used in the next-generation iPhone and iPad devices, according to industry sources.

Thanks to the pull-in of orders from Qualcomm, TSMC is expected to register a revenue drop of up to 5% sequentially in the first quarter, said the sources.

TSMC declined to comment on the speculation about Qualcomm's wafer starts. The company also said it has not yet given its guidance for the first quarter of 2011.

TSMC has estimated its consolidated revenues for fourth-quarter 2010 at NT$107-109 billion, down 3-5% on quarter. Demand for communication-related IC is expected to continue sequential growth in the fourth quarter, but demand coming from both the PC and consumer electronics sectors will decline, the company indicated.