Cypress Semiconductor Corp reported a quarterly profit that beat analysts' estimates on strong demand for its mobile handset touchscreens, but warned of a higher-than-expected revenue decline in the fourth quarter.

The company said it expects a higher-than-usual fall in fourth-quarter sales on continued market uncertainty.

Due to a combination of macroeconomic concerns, customer-specific issues, a decrease in distributor bookings, and our lowest lead times in years, we saw a large decrease in backlog and bookings in all divisions during the (third) quarter, the company said in a statement.

The company, traditionally a maker of SRAM chips that help computers perform core memory functions, has leapfrogged into the smartphone market with several design wins.

Cypress, which makes touch controllers for Samsung Electronics' Galaxy series of devices, also supplies to Acer Inc and Fujitsu .

The company has benefited from touchscreens making their way into gadgets such as cameras, automotive dashboards, GPS devices, printers, internet-protocol phones, e-books and tablet computers.

Cypress, Synaptics Inc and Atmel Corp control over 90 percent of the market for touchscreen chips.

For the quarter ended Oct. 2, net income was $39.9 million, or 22 cents a share, compared with $34.4 million, or 18 cents a share, a year ago.

Excluding items, the company earned 37 cents a share.

Revenue rose 14 percent to $264.7 million.

Sales at its consumer and computation division, which accounts for more than half of total revenue, rose 55 percent driven by a jump in sales of TrueTouch touchscreens.

Analysts, on average, expected a profit of 33 cents a share on sales of $265.2 million.

Shares of the San Jose, California-based company were down 2 percent in early trade on Thursday on Nasdaq.