Apple's future processor partner, Intel, yesterday reported $9.96 billion in third-quarter revenue, a jump of 18 per cent on the year-ago quarter ($8.47 billion).

Sales of microprocessors, chipsets, flash memory and wireless and portable device components all hit record levels for the quarter, Intel said. Motherboard sales declined, it admitted.

China, Asia-Pacific hold IT key

Revenue grew fastest in the Asia-Pacific region, where China is on the verge of overtaking Japan as the world's number two purchaser of PCs, Intel executives said.

Asia-Pacific revenue grew 28 per cent year-over-year, according to Intel chief financial officer Andy Bryant: "Growth in this region was fueled by continuing broad strength in demand for mobile platforms, including strong local consumption in China and India," he said.

The company's revenue grew by a more modest 6 per cent, year over year, in Europe and the Americas, Bryant said.

Analysts disappointed

Intel's earnings, which amounted to $0.32 per share, were up 7 per cent from the same period last year, but came in short of analysts' expectations. Wall Street had expected revenue to be $9.922 billion and earnings to be $0.33 per share, according to a survey by Thomson First Call.

Earnings were hit by a $300 million patent infringement settlement between the chip maker and broadband software vendor MicroUnity, reached earlier this month, as well as a $250 million tax bill that resulted from Intel's decision to repatriate foreign-earned income, the company said.

The results were at the high end of what Intel itself had been expecting for the quarter, which ended October 1. Last month, Intel had said that it expected revenue for the third quarter, typically one of the strongest quarters of the year, to fall between $9.8 billion and $10 billion.

The only way is up

Revenue for Intel's fourth quarter is expected to be between $10.2 billion and $10.8 billion, the company said.

This estimate was lower than the $10.4 billion to $11.1 billion range that financial analysts had been expecting. It was weaker, in part, because computer makers bought about $100 million in excess inventory during the third quarter as a hedge against any supply shortages that may materialize, Bryant said.

"Growth in the third quarter was a little better than usual for this time of year, but growth in the fourth quarter is expected to be a little slower," he said.

Growing reserves

Intel has had some difficulty meeting chipset demand as it has switched manufacturing processes and begun making chips on larger 300 millimetre wafers. Intel had to temporarily pull back its production of low-end chipsets during the quarter in order to focus on the more lucrative high-end components, the company said.

As a result, it appears that some computer manufacturers did their fourth quarter ordering a little early.

"We had been in a period of tightness. Our customers wanted to make sure they had an ability to respond to a fourth-quarter upside," Bryant said. "It's perfectly natural to get a few extra parts."

Intel stock declined slightly on the after hours markets last night.