Broadcom sees more demand for chips, raises 4th-quarter outlook

Broadcom Corp. raised its outlook for the fourth quarter, saying revenue would be more than expected thanks to improved demand for its chips.

Weak economies in the U.S. and Europe have sapped demand for microchips, and investors are looking for signs of when the industry will bottom out and begin to improve.

Broadcom Chief Executive Scott McGregor said in a statement that the Irvine company’s fourth quarter was “coming in stronger than expected driven by solid shipments and tight operational management.”

Worries about slow demand have pushed many manufacturers in recent months to reduce inventories of semiconductors supplied by Broadcom and its competitors, which make chips for products such as Apple iPhones and television set-top boxes.

The improved outlook from Broadcom was announced ahead of its annual analyst day in New York on Wednesday.

The relatively positive revision follows warnings last week by chip maker Altera Corp. and semiconductor maker Texas Instruments Inc., which cut its outlook for the current quarter and cautioned that demand was broadly lower as customers reduced their inventories.

Last week McGregor downplayed the risk to future demand from Europe’s debt crisis, saying people had already factored the risks around Europe into their plans.

Broadcom increased its revenue forecast to about $1.8 billion, the high end of its prior range. Analysts on average were forecasting revenue of $1.76 billion, according to Thomson Reuters.

Broadcom shares rose 26 cents to $28.45.