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BOSTON, May 3 (Reuters) Qualcomm Inc. on Wednesday raised its earnings forecast for the fiscal third quarter, citing rising demand for its cheapest cell phone chips, as well as for its most advanced wireless technology.

Qualcomm, which sells technology licenses and cell phone semiconductors, lifted its forecast for earnings excluding its investment arm to a range of 38 to 40 cents a share for the quarter ending June 25, from a prior estimate of 36 to 38 cents. Analysts had expected earnings before items of 38 cents a share.

The company predicted net earnings per share of 32 to 34 cents for the quarter, against average Wall Street expectations of 33 cents according to Reuters Estimates.

Chief Executive Paul Jacobs attributed the higher forecast to better-than-expected sales of lower-priced chipsets. Much of the cell phone industry's current growth is coming from emerging markets such as China and India.

Jacobs said the company is also benefiting from increased demand for a high-speed wireless technology known as EV-DO, which is being used by companies such as Verizon Wireless and Sprint Nextel Corp. to deliver services like video and music downloads to cell phones.

Qualcomm also makes money on third-generation (3G) phones sold by No. 1 U.S. mobile operator Cingular Wireless.

''We have a real 3G deployment race going on at the moment in the U.S,'' said Yankee Group wireless analyst Keith Mallinson. ''This competitive battle is beneficial to Qualcomm.'' Although it remains unclear whether consumers will be motivated to pay extra for the new 3G data plans and services, Qualcomm benefits as mobile operators invest in putting the technology into their handsets and networks, Mallinson said.

Qualcomm also said it expects pro forma quarterly revenue to be ''at or slightly above'' the high end of its prior guidance of $1.77 billion to $1.87 billion.

That figure, which excludes revenue from its investment arm, compares to $1.36 billion in revenue in the year-ago quarter. The company released the forecasts ahead of an analyst meeting on Thursday.

Qualcomm shares rose 20 cents, or 0.3 percent, to $51.26 in Nasdaq trade.

REUTERS SBJ ND2027

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