TI's analog chips, used in a everything from phones and consumer electronics to cars and industrial equipment, were the biggest driver of growth in the quarter, the company said during a conference call with analysts.
TI investor relations executive Ron Slaymaker told analysts that like the first quarter, Asia was driving the improvements and Europe and the United States were lagging behind. He also said that mobile phone chips were selling better than TI had initially expected at the start of the quarter.
The company, which competes with Qualcomm Inc
It forecast current-quarter revenue of $2.3 billion to $2.5 billion compared with its previous expectation for a range of $1.95 billion to $2.40 billion.
On average analysts had expected revenue of $2.21 billion, according to Reuters Estimates.
Analysts said investors had expected TI's targets to increase but that the improvement was better than hoped for.
It was a little higher than some people had expected. It's a continuing of the trend of semiconductor ordering bouncing off the bottom since late February, said Jefferies & Co. analyst Adam Benjamin.
Another analyst Doug Freedman of Broadpoint Amtech noted that the guidance still implied a revenue decline of 28 percent from the same quarter a year ago.
We still have a ways to go before the semiconductor revenue number returns to the comparable year over year production level from the hardware manufacturers, he said.
Manufacturers have been drastically cutting their stockpiles of chips from TI and other chip makers in recent quarters amid weak consumer demand in the recession.
Now that stockpiles are much lower Slaymaker said clients were slowing their chip inventory cuts but he said they were still not building up stock levels for any big improvement in consumer demand.
What we believe is happening is that we're seeing customers getting rid of inventory at a slower rate than in the first quarter, he said.
TI's biggest wireless customer is cellphone market leader Nokia
TI shares rose to $20.70 in after-hours trade after closing at $19.77 on New York Stock Exchange ahead of the update.
(Reporting by Sinead Carew; editing by Carol Bishopric)