Morning, and good evening, ladies and gentlemen. No matter where you are, welcome to Win Semi's Results Webcast Conference for the Third Quarter of 2021. My name is Joe Tsen, the Spokesman and Associate Vice President of Finance in Win Semi. Joining me today on today's call is Steve Chen, General Manager of Corporate Administration of Win Semi. Today's call is organized into three sections. First of all, Steve will comment on the company's results and provide brief guidance for the fourth quarter of 2021. Secondly, I will go through the financials in detail. After that, we will open to the floor for Q&A. Please freely submit your questions in the input box on the webcast window throughout the conference. Before we begin, I would like to draw your attention to the safe harbor notice on page one of the presentation slides.
Please note that this presentation contains forward-looking statements, and these statements are based on our current expectations. Actual results may differ materially from our expectations, and the company undertakes no obligation to update these forward-looking statements going forward. Now, let me hand over the call to Mr. Steve Chen, General Manager of Win Semi.
Thank you, Joe, and welcome everyone. In the third quarter of 2021, driven by the robust customer demand, our consolidated revenue was TWD 6.76 billion, an increase of 9% quarter-on-quarter, which was roughly in line with our previous expectation. Given better product mix and higher capacity utilization rate, our gross margin was better than our previous expectation, with a sequential increase of 3.1 percentage points to 38.8%, which was the highest level this year. Our operating margin also increased by 4.1 percentage points sequentially to the level of 26.8%. EPS in the third quarter was TWD 3.67, and EPS for the first three quarters of 2021 was TWD 8.71. Third quarter is the traditionally high season for the smartphone.
Taking a close look at the individual performance of each product segment, thanks to the debut of the high-end smartphone, our optical revenue, which was primarily for 3D sensing, delivered the highest quarter-over-quarter growth. Although the die shrink of the new generation 3D sensing chip may affect the overall demand of epi wafers, it will also increase the difficulty of the wafer production and the entry barriers for the peers at the same time. This is evidenced by our customer demand for the optical wafer in the third quarter, which was as strong as the previous year and was not affected by small die size. In addition, 5G cellular PA and infrastructure-related revenue both increased single digits quarter-over-quarter. Overall, the growth from the cellular PA customer remains the most prominent among all product segments this yea.
Specifically, the contribution of the 5G PA revenue to the total sales cellular PA revenue maintained at over 20% in the third quarter, which was similar to the previous quarter. This reaffirms that the momentum of the 5G smartphone has sustained. Although we will not add new production capacity this year, we have adopted a strategy of maximizing existing production capacity through improving efficiency to fulfil customer demand. While our utilization rate in the third quarter has reached 95%, we continue to execute our scheduled capacity expansion plan, preparing for the new capacity next year, as well as the new facility for long-term expansion. Looking ahead to the fourth quarter of 2021, we expect revenue to grow by mid-single digits quarter-on-quarter and gross margin to be around the level of high 30s. I will turn the call back to Joe Tsen. Thank you.
Okay, now it's our pleasure to present our financial results for the third quarter of 2021. Please refer to the presentation slide starting from page four. Before that, please read over our safe harbor notice first. Starting from page four, talk about revenue and the margin. Our Q3 revenue for this year was TWD 6.76 billion. QoQ was up 9% and YoY was up 3%. Because of the better product mix and the higher utilization rate, the gross margin increased by 3.1 percentage points to 38.8%, which is the highest level in this year. The higher utilization rate as high as 95% this quarter. It's one of the reason and almost the most of the reason other than that, the better product mix. We can discuss it later in page seven.
Another one of the reason is probably the depreciation expense not as high as we expected in the very beginning. Operating margin therefore also increased about 4.1 percentage points to 26.8%. That's OP margin. The net profit for next page five, the Q3 net profit was TWD 1.5 billion. QoQ was up 61% and YoY down 24%. The EPS therefore become TWD 3.67. Compared to last quarter, last quarter was TWD 2.32. Accumulated Q1 to Q3 become TWD 8.71.
Next page six, we can discuss about free cash flow and the gearing. As the CapEx in Q3 was a little bit lower than last quarter. We have a net inflow for free cash flow. Also because the Q3 is the season for dividend pay-out, the interest-bearing debt and the gearing ratio was higher than last quarter. We can discuss the product mix now for page seven. The Q3's product mix, our cellular business was between 45% to 50% , and infrastructure was between 15% and 20% , and Wi-Fi is between 10% and 15% . The others majority was 3D sensing and optical product was 19% .
Compared to the last quarter and the before, you can see that. Remember, the total revenue for this quarter was up 9%. The cellular, although the cellular percentage was down about 5 percentage points, but the dollar value probably still a little bit higher, still grows for single digits b ut the 5G revenue was over 20% of the total cellular, which is in line with the Q2's level. The infrastructure, also the percentage was in line with last quarter, but still have the single digit of growth, which is the most reach for the gross margin factor. For Wi-Fi business, actually, it's still in the same range as last quarter.
The Wi-Fi business is, it's , I think it's the weakest business in the product mix for overall this year. Most of the reasons still, I think the content. No, there is a for Wi-Fi 6 as majority without the content increase per box. Then recently, the market talk about the Wi-Fi SoC shortage might impact some of the customers' demand. Finally, the 3D sensing business, I think, is the most significant growth quarter-on-quarter from 14% to 19% this quarter. You can see that it's even sustained or even a little bit higher than a year ago. You can see that although there is some a design change for die shrink in this generation, but it didn't really impact our business for this year. Okay. The next page here, page eight, is to talk about 4Q's guidance.
I think Steve has talked about that. I'm gonna repeat again. We expect Q4 2021 revenue to grow by mid-single digit QoQ. We also expect the gross margin to be around the level of high 30s. Okay. Excuse me. We can quickly go through the income statement and the balances. Before I begin, I have to remind everybody, this is on unaudited basis. The final result has to be based on the CPA's report. For Q3 2021, the net revenue was TWD 6,761 million QoQ, up 9% and YoY up 3%. The gross profit was TWD 2,623 million, and QoQ was up by 19%. The gross margin became 38.8%, improving 3.1 percentage points compared to last quarter. Operating expense was TWD 814 million, and operating expense ratio was at 12%.
The operating income was TWD 1,810 million, and QoQ was up 28%. OP margin improved 4.1 percentage points to 26.8% in this quarter. The non-OP item was a positive 28 million TWD, and the detail is in page 12 for your own reference. The income before income tax was TWD 1,838 million, and the income tax expense was TWD 342 million, equivalent to the tax rate, about 18.6%. The net income was TWD 1,496 million. The QoQ was up 61%. The net margin become 21.1%, improving 7.1 percentage points compared to the last quarter. EPS for this quarter is TWD 3.67, QoQ is up 58%. The ROE for this quarter equivalent to 19%, improved from 12% last quarter. Approximately utilization rate 95%. It's up from 90% last quarter.
Depreciation expense was 990 million, and the CapEx for this quarter was TWD 1,289 million. This is the Q3. The next page here, in page 11, we can talk about the accumulated Q1 to Q3's income statement. The total revenue accumulated Q1 to Q3 was TWD 18,965 million. YoY is up 1%, and gross profit was TWD 6,847 million. The gross margin accumulated the first three quarter was 36.1%. Our operating expense ratio was 13%. Operating income become TWD 4,414 million. Operating margin become 23.3% in this quarter.
I'm sorry, in the first three quarters. The non-op item for the first three quarters was negative 64 million TWD. The detail, again, in page 12 for your own reference. The income before income tax was 4,351 million TWD, and the net income becomes 3,521 million TWD. The net margin become 18.6%. Therefore, the EPS for the first three quarters was TWD 8.71. The ROE equivalent to 15% for the first three quarters, and approximately accumulated utilization rate was 90% for the first three quarters. Depreciation expense accumulated become TWD 3.017 billion , and the CapEx, it was TWD 5.825 billion.
We conclude that the total 2021 depreciation expense approximately compared to last year probably increased about between 10% and 20%. The CapEx for the whole year probably will be around TWD 8 billion ±. The page 12 is a non-op item. It's here for your own reference. Finally, the page 13 is the balance sheet up to the date September 30th, 2021. A couple major ones, cash and cash equivalents was TWD 16,482 billion. The total assets was almost TWD 72 billion, almost.
The total liability was TWD 37,021 million. The common stock remain the same, 4,240 million TWD. The total equity become 34,978 million TWD. The equity per share, which is book value per share, was TWD 77.33. Some key indexes like current ratio was 218%, and the debt ratio was 51% for the September 30th. This is the financial results for the Q3 and up to the September 30th. Now we can begin the Q&A.
Please submit your questions in the input box on the webcast window now. There's a question asking about well Win Semi considering raising the product price. We know the price hike was the popular term for this year. I mean, the most of the semiconductor industry was having the price hike, and including our competitors in Taiwan also raising the price for their product. I think first of all I have to say that for the Compound Semiconductor I think silicon semi has some shortage in demand.
Of course, there is a lot of demand coming from PC, tablet, and even the automotive. That there is a reason to do the price hike. For Compound Semi, actually, I think we have a sufficient capacity and to supply the customer. Without a proper reason and without any warning, I mean, that will ruin the trust between Win Semi and our customer. We don't think there's really a shortage for PA. I think, yes, we're running the very high utilization and so does our competitor.
It's not an easy thing to just go ahead and raise the price and then forget about any consequences. I mean, we have to keep the relationship, the trust and the relationship between us and our customer. We do have a very good relationship and a long-term agreement with the customer. We have no plan to raise the price, at least in the timeframe for the contract and the agreement with the customer. Thank you. Okay. There's some investor concern about the infrastructure business.
I think this year I think in the supply chain there is an inventory issue for infrastructure industry. I think no matter the upstream AP house or the downstream IDM company all mentioned that in their earnings call before. I think for Win Semi most of the reason is, of course, as everybody know that we have a big customer, a China customer, last year. I mean even in the past two years and as everybody know that since the September 15th nobody can do business with them and the business stopped at that time.
Before that, the infrastructure, you can see that our infrastructure business was going very well and the very percentage also reached a record high. This year, we conclude that this customer probably is accumulating a lot of inventory on hand in the past one years. Therefore, starting from this year, everybody, you can see that the infrastructure business go back to the percentage before, which is like between 15% and 20%, this percentage. The whole industry also suffering the inventory correction not only Win Semi.
Yeah, I know that there is some noise for this year, not only the infrastructure, but also some 5G smartphone. For us, the smartphone business or even the 5G smartphone business still doing okay, and then even the cellular business is doing well. Infrastructure, I think, we're still waiting for some signal for recovery. Actually, for the recent quarter, like Q3, it's ramping up better than the Q2. Maybe, if the product mix remain similar for Q4 and then probably also a little bit better.
We believe that the 5G generation is just the early stage, and think about it, the 4G went for 10 years and the 5G is only for three years now. It's still the early stage. There's no reason the momentum is just finished. No, I don't think so. It's just a temporary inventory issue and need to take time to digest it. Thank you. Okay, it looks like there's no further question. We're gonna spend some time to explain our current progress in the recent plan for the capacity expansion.
As everybody know that we don't have new capacity coming up for this year. What we doing this year is we spend a lot of resources to expand the clean room space, the final clean room space in our Fab C. Without the clean room space, it's we cannot have a new capacity. The new clean room is gonna finish about the first half next year. Therefore, the equipment moving and we have the new capacity come out in the second half for the year 2022.
So far, the early trend probably it's about 3k to 5K wafer per month for this size. Normally we for every year we expand for about 10%. Still early to make the final decision, but roughly it's about this range. This is the recent CapEx for our Fab C and a new capacity. If still no question, then maybe we can have Steve Chen to talk about our Southern Taiwan Science Park's expansion.
Okay. Thanks, Joe. I think right now I will update some status of our new site in Kaohsiung. Right now it's already under construction, and we will spend around two years to finish all the shell and then start to moving the equipment and making the qualification schedule. Until right now, according to the schedule, I think the new Kaohsiung site maybe will have the mass production contribution at maybe around at the end of 2024 to 2025, around this period. Because right now it's still in the very initial stage about the construction. Right now it's not so much status update, and we will update this status in the next conference call. Thank you.
Hi, everyone. We apologize that we experiencing a technical difficulty in the past about five minutes. If you're still there, then we gonna continue our conference.
Okay. There's a question want to discuss about the optical products, process or possible improvement in the future. Yeah, I think right now the optical product, I think for the VCSEL, for the 3D sensing, we already use 6-inch to produce the wafer. For the other traditional optical wafer, some of that we're still using the 4-inch to produce. I think in the future we still have the chance to making improvement about design and the process to move all the applications to the 6-inch in the future. Yeah. I think that that's the possible direction of the optical. Yes. Thank you.
Okay, there are investors concerned about the Chinese customer this year. To discuss that, I have to say sorry, but probably we cannot describe any details for individual customer one by one b ut overall, I think the status is the things of the largest Chinese customer last year. We cannot do business with them, but the market share is a rearrange in the China market for smartphone. Our Chinese customer, since many PA design house in the market gaining share one by one, and from the.
I think from the brand name smartphone, China brand name smartphone, they're gaining share, benefit our customer. I think almost all of the design house have a business with them, with us. Of course, one of the major one also in our top five customer list is Wenshi, which is familiar to the investor. Other than them, we see the significant growth to some other this customer. They also doing well, and it's continuing growth in this market this year. We expect...
That's why what we expect that we have mentioned it for cellular PA customer is the most strong product group for this year. I think we see the very strong growth in this region. Not only the Q3, I think even continuing in the Q4. Yeah. I think Win Semi's diversified strategy it works to support all of the customer no matter the market up and down. We don't bet on one single customer, but of course we won't miss any opportunity to gain the market share.
I think this year we're gaining share in China PA smartphone market. Thank you. Okay, there are no further questions. We're gonna finish this conference call. Thank you for your participation in Win Semi's conference. We apologize for the interruption for the telephone line and the technical difficulty that happened for a couple minutes. We apologize for that again. There is no further question, then there will be a webcast replay within hours. Please visit www.winfoundry.com under the Investor Relations section. Thank you very much, and goodbye. You can disconnect now. Thank you. Bye-bye.
Thank you. Bye-bye.