Intel sets the tone for the tech sector

The company said that demand for mobile phones, and for other handheld devices, was key to the sustained recovery.

"We're starting to see a real change in the (communications) business, rather than a one-time blip," said chief financial officer Andy Bryant.

The firm predicts $8-8.2bn (�4.3-4.5bn) in sales for the three months to June, about the same as the previous quarter.

Profits for the first quarter had been $1.7bn, almost twice those seen in the same period of 2003.

Intel had previously predicted second-quarter sales of $7.6-$8.2bn.

The news, released after Wall Street closed, saw the firm's shares rise 2% in after-market trading, having fallen slightly further during the day.

Flash recovery

Like many in the chip business, Intel has seen increasing amounts of its sales come not only from the computer market where it is best known, but also from the market for handheld devices.

Key to this market is "flash" memory, which holds onto the data it contains after power is switched off.

Intel's communications business made an $850m operating loss in 2003, as a rise in prices encouraged some customers to turn to its competitors.

Mr Bryant said the tough times seemed to be over, with both market share and the overall size of the mobile phone market growing.