With strong sales across its major product lines, Intel on Tuesday reported $9.96 billion in third-quarter revenue, a jump of 18 per cent over the $8.47 billion the California chip maker posted for last year's third quarter.

Unit sales of microprocessors, chipsets, flash memory and wireless and portable device components all hit record levels for the quarter, Intel said in a statement. Sales of motherboards, however, declined, the company said.

Revenue grew fastest in the Asia-Pacific region, where China is on the verge of overtaking Japan as the world's number two purchaser of PCs, Intel executives said during a conference call to discuss the results.

Asia-Pacific revenue grew 28 per cent year-over-year, according to Intel chief financial officer Andy Bryant. "Growth in this region was fueled by continuing broad strength in demand for mobile platforms, including strong local consumption in China and India," he said.

The company's revenue grew by a more modest six percent, year over year, in Europe and the Americas, Bryant said.

Intel's earnings, which amounted to $0.32 per share, were up 7 per cent from the same period last year, but came in short of analysts' expectations. Wall Street had expected revenue to be $9.922 billion and earnings to be $0.33 per share, according to a survey by Thomson First Call.

Earnings were hit by a $300 million patent infringement settlement between the chip maker and broadband software vendor MicroUnity Inc, reached earlier this month, as well as a $250 million tax bill that resulted from Intel's decision to repatriate foreign-earned income, the company said.

The results were at the high end of what Intel itself had been expecting for the quarter, which ended October 1. Last month, Intel had said that it expected revenue for the third quarter, typically one of the strongest quarters of the year, to fall between $9.8 billion and $10 billion.

Revenue for Intel's fourth quarter is expected to be between $10.2 billion and $10.8 billion, the company said.

This estimate was lower than the $10.4 billion to $11.1 billion range that financial analysts had been expecting. It was weaker, in part, because computer makers bought about $100 million in excess inventory during the third quarter as a hedge against any supply shortages that may materialize, Bryant said.

"Growth in the third quarter was a little better than usual for this time of year, but growth in the fourth quarter is expected to be a little slower," he said.

Intel has had some difficulty meeting chipset demand as it has switched manufacturing processes and begun making chips on larger 300 millimeter wafers. Intel had to temporarily pull back its production of low-end chipsets during the quarter in order to focus on the more lucrative high-end components, the company said.

As a result, it appears that some computer manufacturers did their fourth quarter ordering a little early.

"We had been in a period of tightness. Our customers wanted to make sure they had an ability to respond to a fourth-quarter upside," Bryant said. "It's perfectly natural to get a few extra parts."

Investors were not thrilled with the company's fourth-quarter prognosis. Intel's stock was down about three per cent in after-hours trading Tuesday evening, hitting $22.95 on the Inet after-hours exchange. The stock closed Tuesday at $23.72.