Israeli mobile chip company Ceva forecast strong growth in 2011 after higher phone sales by customers like Nokia and Samsung <005930.KS> helped drive it to a record profit in 2010's final quarter.

Ceva expects 2011 revenue to rise a higher-than-expected 18-23 percent and earnings per share excluding exceptionals to jump 29-36 percent, as the company benefits from the success of its clients in penetrating China's cellular market.

Companies such as Infineon , Broadcom and ST Ericsson license Ceva's technology to build chips known as digital signal processors (DSP).

We experienced exceptional growth in the shipment of cellular baseband processors powered by Ceva DSPs across all handset and mobile broadband device market segments, including feature phones, high-end smartphones, tablets, data cards, and machine-to-machine equipment, Chief Executive Gideon Wertheizer said.

This growth is indicative of the wireless industry momentum behind our licensable DSPs, whereby our customers continue to take market share from industry incumbents that rely on in-house developed DSP technology.

Its shares rose 2.9 percent on Nasdaq to $23.82.

The Chinese cellular market until now has been dominated by Mediatek <2454.TW>, which has begun losing market share to Ceva clients such as Spreadtrum , Infineon and ST Ericsson.

Ceva's 36 percent market share in the global handset cellular baseband market places it ahead of Qualcomm , Texas Instruments and Mediatek.

Diluted earnings per share excluding one-time items in the fourth quarter reached a record 19 cents, up from 11 cents a year earlier. Revenue rose 28 percent to $13 million.

Ceva was expected to earn 17 cents a share excluding items on revenue of $12.5 million, according to Thomson Reuters I/B/E/S.

Ceva expects 2011 revenue of $53.1-$55.1 million and EPS excluding exceptionals of 72-76 cents. Analysts are forecasting revenue of $51.8 million and EPS of 67 cents.

Ceva expects revenue in the first quarter of $13.3-$14.3 million, up 25-35 percent from a year earlier, and EPS excluding items of 18-22 cents, up 50-83 percent from a year ago.

(Reporting by Tova Cohen; Editing by Jon Loades-Carter)