UPDATE 2-TI profit up, outlook eases investor jitters

(Adds CFO comment, analyst reaction, share move)

By Sinead Carew

NEW YORK, Jan 22 (Reuters) - Cellphone chip maker Texas Instruments Inc (TXN.N: Quote, Profile, Research, Stock Buzz) posted a quarterly profit and outlook that signaled solid demand for its chips despite a weak U.S. economy, sending its shares up 3.5 percent.

Chief Financial Officer Kevin March said in an interview that demand for advanced chips used in third-generation phones with high-speed Web links appeared to be strong, while sales of chips for low-end handsets fell only slightly from a year ago.

"I'd say our near term demand trends are good," March told Reuters by phone.

Some investors had been worried that sales of wireless chips or analog chips, which are used in a broad array of products, would falter amid economic concerns. But analysts said that TI's outlook suggested this was not the case.

"It didn't show up in the outlook and it didn't show up in the fourth quarter '07 results," said John Dryden, analyst at Charter Equity Research, referring to whether economic weakness was pressuring analog chip sales.

TI, which makes chips used in everything from cell phones to industrial products, said its fourth quarter net profit rose 13 percent to $756 million, or 54 cents a share, from $668 million, or 45 cents a share, in the year-ago quarter.

Excluding a tax benefit, profit was 53 cents per share, beating the average market forecast of 52 cents, according to Reuters Estimates.