Intel (Nasdaq: INTC), the No. 1 chipmaker, reported first-quarter earnings Tuesday that beat estimates as sales rose much more strongly than expected.

Intel's first-quarter net income was $2.7 billion, or 53 cents a share, 3 cents above estimates, on revenue of $12.9 billion, about $600 million above the forecast.

The first quarter was a solid start to what's expected to be another growth year, said CEO Paul Otellini.

As always, Intel's report is a bellwether for the semiconductor industry.

Early chip signals have been bullish: last week, market researcher Gartner (NYSE: IT) reported first-quarter PC shipments rose nearly 2 percent. The Semiconductor Industry Association boosted its full-year forecast. Intel's flash-memory partner, Micron Technology (NYSE: MU), reported better-than-expected quarter results.:

Analysts surveyed by FactSet Research expected Intel, based in Santa Clara, Calif., to report earnings around $2.5 billion, or 50 cents a share, on revenue of $12.84 billion, compared with $3.2 billion, or 56 cents, on revenue of $12.8 billion, a year ago.

As the No. 1 semiconductor maker, Intel usually provides a forecast for the coming quarter. This time, the company said it expects second-quarter revenue around $13.6 billion, although it could be as much as $14.5 billion. The gross margin, or profits left after expenses, should be about 63 percent, matching the first quarter.

That should indicate new demand for PCs, servers and other other products using Intel's new Ultrabook chips and older processors.

Unlike many chipmakers that outsource production, Intel retains just about all its wafer fabrication in-house, with a global manufacturing presence in countries including China, Ireland and Israel, and assembly and test plants in Malaysia, China, Costa Rica and Vietnam.

In the fourth quarter, Intel reported cash and investments exceeding $16.2 billion, plenty to fund continued expansion as well as research and development. The amount available now is about $15.1 billion, the company said.

Last year, Intel invested $8.4 billion in research, more than International Business Machines Corp. (NYSE: IBM). For the second quarter, the amount invested in research will be $4.6 billion, it announced.

Besides detailing sales of Ultrabooks for the ultralight market battling Apple (Nasdaq: AAPL), Otellini may announce during a conference call later Tuesday when the new Romley chip for advanced servers will come as well as the first chips built on the smallest-ever 14 nanometer technology.

Intel shares, which traded at a 52-week high of $28.78 on Tuesday, are already up 17 percent in 2012 and 44 percent for the past 52 weeks.

At UBS, Uche Orji rates the shares a buy with a target of $34. At RBC Capital, analyst Doug Freedman rates Intel outperform but with a price target of $33.