Intel has said its turnover for the third quarter is likely to exceed expectations after significant increases in orders.

When it announced its results for the second quarter in July, the company warned that sales in the third quarter would be flat.

However, increased demand from computer manufacturers for Intel chips means the company now expects turnover for the third quarter to be up by about 8 or 9 per cent on the second-quarter total of $5.9 billion (£3.98 billion).

The improved outlook is likely to mean no further reductions in the numbers employed at Intel's European microchip manufacturing base in Leixlip, Co Kildare in the medium term. In April, the company announced that 200 people would leave the company through natural wastag. It added that these jobs would not be replaced as part of a world wide "headcount reduction program".

However, it is understood that the pick-up in turnover means further reductions are not now being contemplated.

The Leixlip operation has seen a significant increase in its order book in recent weeks, a company spokesman said yesterday.

"This announcement that revenue will be above expectations is good news for Ireland as the demand is coming from the large computer manufacturers and many of them are supplied with chips manufactured here," he added.

Companies like Toshiba, Dell and Compaq, had "undercalled their orders" during the second quarter and were now making additional orders, said the spokesman.

As a result of this, the Intel Fab14 facility would come into full capacity earlier than expected, he added.

Included in the expectation for gross margins in the third quarter are write-offs associated with "facilities re-alignment" and improved manufacturing efficiencies. The company expects interest and other income for the third quarter to be approximately $170 million, up from a previous forecast of $145 million. It says these figures assume no significant changes in interest rates or other unexpected items.