Intel's 25% profit jump reassures investors

Worried that the ailing US economy has spilled abroad and hurt global PC sales, investors had subdued expectations for Intel in the second quarter, an Associated Press report said.

Intel is the world's largest computer chip maker, and its fortunes rise and fall with swings in PC demand.

The company responded with a 25% jump in profit and record sales in the quarter, fueled by strong sales of processors for laptop computers, the Associated Press report said.

The results easily beat analysts' expectations and reassured Wall Street that Intel is weathering the dreary domestic economy thanks to its broad international reach, a robust product lineup, and a manufacturing advantage over smaller rival Advanced Micro Devices that lowers Intel's cost of making chips.

The report also quoted Intel CEO Paul Otellini saying demand for Intel's chips remains strong 'in all segments and all parts of the globe.'

Three-quarters of Intel's business is outside the US.

Intel said its net income was €(US$1.6 billion) in the three-month period ending June 28. It was a 25% jump from the €807.4 million (US$1.28 billion) that Intel earned a year ago.

Intel is profiting from surging global demand for laptops and the processors that power them, though lower prices for some of the fastest-growing models drove down Intel's closely watched average selling price in the latest quarter.

However, Intel can absorb the trend easier than AMD because Intel has made a faster switch to a new manufacturing process that lowers the cost of making each chip.