Third quarter profits at Texas Instruments Inc. (search) grew by $116 million from a year ago due to rising demand for its chips used in high-end mobile phones and digital light processing systems for big-screen televisions.

TI, which makes chips for more than half the world's mobile phones, said Monday it earned $563 million, or 32 cents per share, in the July-September quarter, compared to $447 million, or 25 cents per share, a year earlier.

Analysts surveyed by Thomson First Call (search) had expected earnings of 27 cents per share. The company topped its own revised earnings estimate of 27 cents to 29 cents a share it had forecast in August.

Revenue was $3.25 billion, up 28 percent from $2.53 billion a year ago, and a new high for the company.

TI chief executive Rich Templeton said the record revenue from wireless and DLP products (search) helped offset weaker demand for semiconductor products.

Wireless revenue grew by 40 percent over the year-ago quarter, primarily because of high demand for its chips used in cellular phones that run on high-speed 3G networks.

The Dallas-based company said its DLP systems now outsell plasma in the North American market for big-screen televisions.

TI said it was reducing inventory to offset slower growth with its semiconductor customers and distributors, however.

"Certainly that is something we're watching to carry into the fourth quarter as well, but we don't see significant signs of a slowdown in demand," said Ron Slaymaker, TI's director of investor relations.

Analysts said TI's earnings were about what they expected based on the revised forecast the company released in August.

"One of the issues with Texas Instruments was a fear that this report was going to unleash a major negative surprise," said Cody Acree of Legg Mason Wood Walker Inc. "There was nothing that was dramatically negative. At the same time there was nothing overly positive, either."

TI also predicted fourth quarter revenue between $2.96 billion and $3.2 billion with earnings per share of between 24 and 28 cents.

The company also announced plans to spend $1 billion to repurchase shares and a 17 percent higher dividend.

Shares of TI fell 13 cents to close at $21.09 in trading before the report was released. In after-hours trading, shares surged 5.7 percent, or $1.21.