The semiconductor industry is struggling

The firm said it expected its revenues for the April to June period to be in the range $6.6bn to $6.8bn.

That compares with its previous forecast of between $6.4bn and $7bn for the quarter.

While demand for communication chips was sluggish, Intel said sales of its microprocessors were "trending to the high end of normal seasonal pattern".

Shares fall

The chip industry is still struggling to recover from its worst ever downturn.

Intel is seen as a barometer for the industry because of its size.

The new revenue forecast was in line with expectations, and some analysts said the company was doing well given current economic conditions.

"It's a minor miracle in the face of war, a lousy economy in Europe, Sars in Asia and the scourge in the US Fortune 1000, which is not spending money on (information technology)," said Wedbush Morgan Securities analyst David Wu.

Shares in Intel had risen 46 cents to close at $21.84 ahead of the trading update, but they fell back to $21.45 in after-hours trade.

The narrowing of the revenue forecast left the midpoint unchanged at $6.7bn.

That would be a slight fall in Intel's first quarter earnings of $6.75bn, which itself was down 6% from the previous quarter and flat compared with the same period a year ago.