Aug. 28--IN ANOTHER INDICATION THE ECONOMY -- and especially the tech sector -- is emerging from the worldwide recession, Santa Clara semiconductor giant Intel today raised its third-quarter sales forecast, citing "stronger-than-expected demand" for its chips.

While issuing the usual cautionary statements about how unanticipated business conditions may alter its prospects, Intel, which is widely regarded as a barometer for the tech industry as a whole, said it expects sales for the third quarter to be $8.8 billion to $9.2 billion.

On July 14, when Intel reported its second-quarter earnings, it predicted third-quarter sales of $8.1 billion to $8.9 billion.

Analysts surveyed before Friday by Thomson Reuters were expecting $8.55 billion in revenue.

Intel, the world's biggest chip maker and the dominant supplier of the brainy microprocessors used in personal computers, also said it expects the quarter's gross profit margin to be in the upper half of the range it previously forecast.

The news sent Intel's shares up in early trading. At 9:22 a.m. PDT, the stock was up 75 cents, or nearly 4 percent, to $20.22.

FBR Capital Markets analyst Craig Berger said in a note to his clients that Intel's revised forecast reinforces what he and other analysts have been noting for months: Demand for chips used in PCs and other products is perking up.

Moreover, he said, "We commend Intel management for its stellar process. product and

business execution in this down cycle."

However, Berger voiced a concern expressed by other Wall Street observers that Intel could face problems ahead, in part because of its low-priced microprocessor dubbed Atom.

Intel has had success getting Atom into most of the "netbooks" on the market and hopes to expand the chip's use in many other products, including smart-phones. However, Berger and some other analysts worry that sales of Atom may eat into sales of Intel's more powerful and more expensive microprocessors, which could hurt the company's bottom line.

In addition, Berger noted that Intel faces stiff competition getting its chips into smart-phones, noting "we do not think Intel has any particular advantages here."

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