It is technology that tends to lead countries and economies out of recession

Mark Whitby Intel MD for Northern Europe

The news has prompted renewed investor confidence in the technology sector in markets around the world.

"The semiconductor industry tends to be the first into a recession but pulls through the earliest," Mark Whitby, Intel's managing director for Northern Europe told BBC News Online.

This means that market watchers are particularly vigilant of the chip sector and the fact that Intel has met its growth projections is a "healthy sign", he added.

Intel's shares surged almost 7% before the announcement, and a further 2% in after hours trading once it had released its results.

The news prompted a tech rally in Asian markets, with Korea's Samsung - the largest chip maker in the world - gaining 5%.

Improved margins

Intel earned a net $1bn (�696m) in the first three months of this year, as against $1.1bn in the same quarter of 2001.

With revenues more or less steady at $6.8bn, the company has brought to an end a series of declining quarters, and felt modestly confident about prospects going forward.

The US and Europe continue to be impacted by weak IT spending

Mark Whitby

And it has already improved its margins, thanks to better product mixes and improved factory efficiency.

The firm insisted, however, that the decline in tech demand was far from over.

"We are being powered by the major emerging markets of China, India and Russia," said Mr Whitby, "but established markets such as the US and Europe continue to be impacted by weak IT spending."

Mr Whitby was hesitant to predict when corporate spending on IT would pick-up in the West, although he pointed out that a lot of equipment is coming up for renewal three years after the pre-millennium technology spend.

The semiconductor industry has been suffering from a global slump in demand for personal computers as companies have reined in spending due to the economic slowdown.

Ramping up

But Intel says it is well positioned to take advantage of the upturn, when it happens.

On 2 April, the company unveiled a 2.4 gigahertz Pentium 4, its fastest chip yet.

Its strategy has led it to continue investing heavily in research and development despite the tough times.

"We will be ready to ramp production up very rapidly," Mr Whitby said.

The dire straits of the global chip market has driven many of Intel's smaller rivals to extreme measures to cut costs and remain afloat.

"It is technology that tends to lead countries and economies out of recession," said Mr Whitby, explaining his firm's continued emphasis on developing new products.