Texas Instruments on Monday posted a drop in quarterly profits as chip demand fell along with sales of cellphones and other electronics due to the weak economy, but it said sales would improve this quarter.

TI, a developer of chips for everything from cellphones to industrial equipment, posted a second-quarter profit of $260 million, or 20 cents per share, compared with $588 million, or 44 cents a share, in the same quarter a year ago.

Excluding items such as restructuring costs, its profit would have been 25 cents per share versus analysts' average expectation for 23 cents a share, according to Reuters Estimates.

Revenue fell to $2.46 billion from $3.35 billion.

Analysts on average had expected revenue of $2.4 billion, according to Reuters Estimates.

The company, which competes with Qualcomm Inc in the wireless chip market, had forecast earnings per share of 14 cents to 22 cents on revenue of $2.3 billion to $2.5 billion.

It forecast current-quarter earnings per share of 29 cents to 39 cents on revenue of $2.5 billion to $2.8 billion.

(Reporting by Sinead Carew; Editing by Richard Chang)