Texas Instruments Inc raised its forecast for third-quarter earnings per share on Wednesday, expecting to ride a gradual recovery in the global semiconductor industry.

We are expecting stronger revenue now in (the) third quarter in every one of our segments than what we had been expecting back in July, said head of investor relations and vice president Ron Slaymaker on a conference call.

The highest sequential growth we would expect to be in our analog segment, he said, adding that wireless would also grow but at a slower pace.

Slaymaker declined to predict that end demand was improving, but said TI's customers appeared to be ramping up production.

Expectations had been for the overall semiconductor industry to begin recovering in the latter half of 2009. Intel Corp in late August raised its outlook for third-quarter revenue, buoying its shares and the entire sector.

On Tuesday, programmable chip maker Altera raised its sales outlook for the third quarter and said market conditions were improving, and Microchip Technology Inc upped its earnings guidance on strengthening demand.

We are seeing, across the board, business being a little better than original expectations, Calyon Securities analyst Srini Pajjuri said.

Right now it's hard to tell if it's end-demand or a build for holidays, he said. We have to see the large tech companies like the HPs and the Dells and the Nokias of the world do better -- that's when we know it's real demand. Also, better retail numbers out of companies like Best Buy .

On Wednesday, Texas Instruments raised its earnings estimate to 37 to 41 cents per share from a previous 29 to 39 cents, surpassing Street forecasts of 36 cents a share, according to Reuters Estimates.

And it hiked its third-quarter revenue forecast to $2.73 billion to $2.87 billion from a previous $2.5 billion to 2.8 billion. Analysts had expected $2.68 billion, according to Reuters Estimates.

Dallas-based Texas Instrument's chips are used in cellphones, televisions and industrial equipment.

Chipmakers have suffered as the economic downturn has dried up demand for personal computers, cellphones and other electronics. The Semiconductor Industry Association forecast in June that year-over-year chip sales would fall 21.3 percent to $195.6 billion in 2009.

But, despite gloomy forecasts, global semiconductor sales have risen sequentially for the past five months, through July, according to the Association.

Rival National Semiconductor Corp is scheduled to report its quarterly earnings on Thursday. National Semi chief Brian Halla said last quarter that the industry had stabilized, but declined to call a bottom.

Analysts expect the Santa Clara, California-based firm to come in slightly ahead of Street earnings expectations.

Shares of Texas Instruments rose to $25.33 after-hours from a close of $25.14 on the New York Stock Exchange.

(Reporting by Clare Baldwin; Editing by Richard Chang)

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