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Last Updated: Tuesday, 13 July, 2004, 22:33 GMT 23:33 UK
Intel sales get mobile phone lift
Intel workers at a chip factory
Intel is seen as a bellwether of the technology industry
Intel, the world's largest chipmaker, has reported a surge in second-quarter profits, driven in part by increasing demand for mobile phone processors.

Sales of chips for desktop computers are slowing and Intel has been tapping into the faster growing market for laptops and wireless communications.

Profit for the three months ending 26 June was $1.8bn (969m) compared with $896m a year earlier.

Shares fell, however, after Intel cut its forecast for gross profit margin.


Investor concerns about the outlook for the technology industry have been amplified in recent days by a number of disappointing earnings reports.

While still remaining upbeat, many analysts are predicting that sales and profit growth across the sector will be slower than first forecast.

Intel shares slid 4% during after-hours electronic trading in New York.

The company said that its gross profit margin for the year would be lower than expected because it was selling more less-profitable products.

As a result, it trimmed its profit margin forecast to about 60% from 62%.

Chief financial officer Andy Bryant said that the business environment and spending patterns in the second half of this year will be "pretty typical".

Intel forecasts that sales in the third quarter will be between $8.6bn and $9.2bn, in-line with market estimates.

Revenue in the second quarter rose to $8.05bn from $6.82bn a year earlier.

Last month, Intel said that the demand for mobile phones, and for other handheld devices, was key to its sustained recovery.

Key to this market is "flash" memory, which holds onto the data it contains after power is switched off.

The BBC's Roshni Abayasekara
"Intel is pinning its hopes on a new generation of products announced last month"

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