Advanced Micro Devices on Tuesday beat market expectations with record third-quarter sales driven by a 44 per cent increase in revenues from its microprocessors.

AMD also exceeded analysts’ forecasts for profits, reporting earnings of 18 cents a share or $76m, compared with expectations of 8 cents.

Sales rose 23 per cent on a year earlier, from $1.24bn to $1.52bn, and were ahead of the consensus of $1.38bn gathered by Thomson Financial. Microprocessor sales rose to $969m, from $673m a year ago.

AMD shares rose 2.6 per cent on the news to $23.90 in after-hours trading.

“This was another record-breaking quarter for AMD’s microprocessor division,” said Robert Rivet, chief financial officer, in a statement. “Exceptional customer demand for our server, mobile and desktop processors helped drive microprocessor sales growth of 44 per cent compared to the third quarter of 2004 and 26 per cent compared to the second quarter of 2005.” There had been new quarterly records in unit and dollar sales, gross margin and operating income, he added.

AMD has achieved technology leads over its bigger rival Intel in developing faster chips that use less power and moving to 64-bit computing and dual-core processors. Analysts expect its advantage to diminish with Intel now releasing its own dual-core chips and moving to a next-generation architecture next year.

AMD also benefited from an improved performance by its Spansion memory chip subsidiary – a joint venture with Fujitsu it plans to spin off. Spansion has suffered from prices falling for flash memory, which is used in mobile phones and other devices. But in the third quarter to September 25, “a more balanced supply and demand environment helped stabilise the average selling price”, Mr Rivet said.

Memory sales were still down 4 per cent on a year ago, but up 12 per cent on the previous quarter.

Overall gross margins were 41 per cent compared to 39 per cent in the second quarter. Operating income improved to $79m from a loss of $7m in the previous quarter.

AMD said it expected fourth-quarter processor sales to grow between 7 and 13 per cent compared to the third quarter.

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