Intel, the world's largest computer chip manufacturer, reported a higher quarterly profit and revenue last night, with sales lifted by stronger demand for its cellular phone memory chips.

The California-based company, which employs more than 3,600 at its Irish operations in Leixlip, Co Kildare, reported a profit of $1.8 billion (€1.46 billion), or 27 US cents a share for the three months to June 26th, compared with a year-earlier profit of $896 million, or 14 cents a share.

Sales rose to $8.05 billion from $6.82 billion in the same period last year.

The results were broadly in line with analyst forecasts of 27 cents earnings per share on turnover of $8.11 billion.

However, Intel lowered its forecast for gross profit margin for the year to around 60 per cent from 62 per cent, citing faster growth of less profitable products.

Intel shares fell to $25.70 in after hours electronic trade from $26.14 at their Nasdaq close. The stock had already eased 10 cents during trading hours following Monday's warning from Merrill Lynch that the semiconductor market could be heading for a cyclical downturn. It cut its forecast for the sector's sales growth next year to 6 per cent from 16 per cent previously.

The company said margins in the second quarter were slightly below previously announced expectations at 59.4 per cent. It attributed this to a product recall that incurred a $38 million charge. Investment gains were also significantly below expectations at $39 million, compared to a $60 million forecast.

Intel also said it expected third-quarter revenue in the range of $8.6 billion to $9.2 billion, in line with analyst estimates of $8.77 billion.

Company projections for research and development spending this year is unchanged at $4.8 billion, as is capital spending at $3.6-$4 billion. - (Reuters)