Wireless technology company Qualcomm Inc. (QCOM) Monday said quarterly profit would be slightly better than expected on strong chip shipments, sending its shares up 4 percent.

The company, a supplier of chips and technology licenses for its CDMA (search) and W-CDMA (search) mobile phone technology, also forecast quarterly revenue at the low end of its target as average selling prices were lower than expected.

"We think unit volumes will be a bigger driver," said Deutsche Bank analyst Brian Modoff, noting that investors were focused on chip demand improvements as revenue was still within Qualcomm's outlook range. Modoff rates the stock a "buy."

"Even with revenue lower than we expected, we're somewhat happy they're still in the range," said the analyst said.

San Diego-based Qualcomm raised its profit target for its fiscal second-quarter ending March 27 to a range of 26 cents to 28 cents a share, up from a previous forecast of 25 cents to 27 cents.

It said the estimate was based on shipments of MSM phone chips (search) in a range of 36 million to 37 million, up from its former view of 35 million to 37 million.

Based on information received from the majority of its license customers, Qualcomm also raised its estimate for first-quarter CDMA and W-CDMA shipments to 51 million to 52 million chips, up from its earlier target of 46 million to 49 million.

But it cut its second quarter revenue outlook to a range of $1.35 billion to $1.40 billion excluding its investment arm, down from a previous forecast of $1.35 billion to $1.45 billion.

This was due to Qualcomm's lower average selling price of $206 per unit compared with a prior estimate of about $214, analysts said.

"What that likely reflects is strengths in places like India and weakness in places like Korea," said Modoff, who noted that wireless chips sell at prices higher than average in Korea and lower than average in India.

Analysts, on average, expected a profit of 27 cents a share on revenue of $1.41 billion for the second quarter, according to Reuters Estimates.

Shares of Qualcomm were up $1.43 at $36.93 on Nasdaq.