Texas Instruments reported a 10 per cent rise in quarterly revenues to a record $3.59bn as more of its chips were used in mobile phones and electronic devices.

TI said third-quarter sales were up 11 per cent on the previous quarter and 10 per cent on a year earlier. Profits of $631m equated to earnings per share of 38 cents, which matched the previous quarter, but were hit for the first time by a 3 cent adjustment for the expensing of stock options, as well as 1 cent for higher taxes. Earnings per share were 32 cents a year ago.

Wall Street had expected earnings of 40 cents on revenues of $3.5bn, according to Thomson First Call. TI’s shares fell 3.4 per cent to $29.88 in after-hours trading.

It predicted revenues in the fourth quarter of $3.425bn to $3.715bn with earnings per share of 36 to 40 cents after 3 cents of stock-option expensing were taken into account. Analysts were expecting earnings of 41 cents and sales of $3.63bn.

The company said its growth was driven by semiconductors, up 13 per cent on the previous quarter and a year ago, “with particularly strong demand for digital signal processors and analogue chips used in a variety of communications and entertainment electronics”. TI said it had reached new highs for gross margin at 49.3 per cent and operating margin at 22.7 per cent.

“TI continues to hold leadership positions in semiconductors for both the high and low ends of the cellphone market,” said Rich Templeton, chief executive.

Revenue from 3G phones was on track to exceed $1bn this year while low-priced phones with TI chips were penetrating markets such as China, India, Brazil and Africa, he added.

Inventory was at “less than desired levels”, down $44m on the previous quarter at $1.16bn on September 30.