Texas Instruments (TI), the world's main maker of chips used in mobile phones, has seen quarterly profit rise.
Despite the positive news, analysts were disappointed by forecasts
However, TI's shares dropped by 4% in extended trading in New York after its forecasts missed analysts' forecasts.
Driving growth has been sales of mobile phones that can surf the web, and offer more sophisticated communication and entertainment services, it said.
Net income totalled $631 (£357m) in the three months to 30 September from $563m a year ago. Sales rose 10% to $3.59bn.
Inventory levels also have declined and analysts warned that the company may not be able to meet demand during the peak end-of-year sales period.
Analysts said it was important that TI increased its chip production to keep up with demand, or rivals would take up the slack and may eat into the firm's market share.
The company's shares lost 4% to $29.70 in after hours trading in New York.
TI's shares have outperformed the market so far this year, and the firm lifted its earnings targets in September.
The company has benefited as clients such as Nokia increase sales of phones that need quicker and a greater number of chips to operate.
Also lifting growth has been strong demand for new phones in emerging markets such as China.