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Intel Sees Rising Processor Sales

The chipmaker raised its third-quarter revenue forecast and revised its gross margin forecast to 56% from 54%.

SAN JOSE, Calif. (AP) -- Semiconductor giant Intel Corp. raised its third-quarter revenue forecast on Friday, citing significant increases in its microprocessor business.

The company now expects sales of between $7.3 billion and $7.8 billion, compared with its earlier forecast of $6.9 billion to $7.5 billion. At the midpoint of the range, it's an 11 percent jump from the second quarter and a 16 percent increase from the third quarter of 2002.

The revision tops the average analyst forecast of $7.24 billion in sales, and earnings of 19 cents per share, according to Thomson First Call. Intel did not release an earnings estimate, but it did revise its gross margin forecast to 56 percent from 54 percent.

Andy Bryant, Intel's chief financial officer, said the upward revision stemmed from the Intel Architecture Group, which includes microprocessors, motherboards and chipsets. All make up the hardware core of personal computers.

"It's basically a general uplifting across the Intel Architecture business," he said. "I don't see anything I could comment on that specifically differentiates itself."

After several years of lackluster or merely seasonal sales, analysts and companies have been expecting improvements as companies and businesses upgrade their aging computers. It's too early to say whether Intel's upward revision marks the start of that so-called upgrade cycle.

Earlier this year, the company launched its Centrino technology, which improves performance, decreases battery demand and offers wireless communications for mobile computers. During a conference call Friday, Bryant repeated earlier statements that Centrino was doing well.

"It's been a pretty good story for us," he said.

On the desktop side, Intel launched Pentium 4 processors and chipsets that widen the path between the microprocessor and memory--a traditional PC bottleneck. It's also releasing processors with Hyper-Threading, a technology that boosts performance by tricking the software into believing a system has two processors instead of one.

Bryant struck a note of caution, saying that it's unclear whether the momentum of the first part of the third quarter will sustain itself in the coming weeks. The company plans to release a midquarter update on Sept. 4.

Bryant also said Intel's logic chip factories were running at nearly full capacity, which could pose problems should demand increase further and production can't be boosted. Bryant said new technologies will soon be introduced to increase capacity.

"I'm not worried that capacity is a great limiter," he said. "I would love to have to face that problem."

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