Shares of Intel Corp. (INTC) rose Wednesday after the leading chipmaker reported better-than-expected quarterly results and raised its manufacturing spending plans.

Intel shares climbed to $23.16 on Nasdaq, up 2.75 percent from Tuesday's close.

In its conference call with analysts, Intel said it had conquered nagging problem with bloated chip inventories and was poised for a good year, citing strong sales of chips for notebook and server computers and rapid growth in India and China.

Banc of America Securities analyst John Lau reiterated his "buy" rating, saying that Intel is gaining competitive strength against rival Advanced Micro Devices Inc. (AMD) and that its "downside is limited from here."

"Recent guidance from AMD indicate revenue growth for its microprocessors was probably less than 12 percent. With Intel reporting microprocessor units growing at 15 percent, this indicates Intel probably gained some market share from AMD," he said in a note to clients.

Intel, whose microprocessors run 80 percent of the world's personal computers, increased its annual budget for spending on factories and chipmaking equipment to about $4.9 billion to $5.3 billion from $3.8 billion in 2004.

Shares of semiconductor manufacturing equipment suppliers were also up in pre-market trade, including Applied Materials Inc. (AMAT), which rose to $16.55 from Tuesday's close of $16.15, and KLA-Tencor Corp.(KLAC), which climbed to $44.00 from $42.42.

Despite the overall optimism, First Albany analyst Auguste Richard cautioned that Intel's growth may slow in 2005.

"Intel's biggest (recent) growth driver ... was its notebook (computer) business," he said in a note. "We think that it is becoming increasing difficult for notebook penetration to drive revenue growth, as incremental improvement in battery life, wireless connectivity, size and weight, as well as processor power, become smaller going forward.