Texas Instruments saw its quarterly profit rise from a year ago and beat forecasts, largely due to a tax credit.
But its current-quarter forecast disappointed as the company said growth was skewed toward low-priced phones.
TI, which makes chips for everything from calculators to the latest high-tech televisions, said its fourth-quarter profit was $668 million, or 45 cents a share, 2% better than the $655 million, or 40 cents a share, it reported in the year-ago quarter.
The company was expected to report earnings of 38 cents a share, according to a consensus estimate compiled by Thomson Financial.
Revenue rose 4.2%, to $3.46 billion from $3.32 billion.
TI said its profit was bolstered by a 5 cent per share federal research tax credit and a 1 cent gain from new patent license agreements that replaced previously expired pacts.
In December, TI cut its forecast for earnings per share from continuing operations to a range of 37 cents to 40 cents, and cut its revenue target to a range of $3.35 billion to $3.50 billion citing weak demand.
The company said its challenges would continue in the first quarter, because customers want lower levels of inventory and growth in the wireless market is skewed to low-priced cell phones instead of higher-priced, full-featured phones.
Texas Instruments said it expects first-quarter earnings per share of 28 cents to 34 cents on revenue of $2.95 billion to $3.2 billion.
On average analysts had expected first-quarter earnings of 35 cents a share on revenue of $3.3 billion.
Its shares have fallen almost 16% in the last four months on investor concern that wireless industry growth is increasingly dependent on the sale of cheaper phones in emerging markets.
TI shares rose about 2% in after-hours trading to $29.15.