By Anne Steele

Intel Corp. on Friday raised its revenue forecast for the third quarter amid signs of improving demand in the personal-computer market.

The chip maker said it now expects third-quarter revenue of $15.6 billion, plus or minus $300 million, up from a previous range of $14.9 billion, plus or minus $500 million. In the year-ago third quarter, revenue was $14.47 billion.

Intel said the guidance increase comes as inventory in the PC supply chain needed to be replenished, and that the company had seen "some signs of improving PC demand."

The company also boosted the midpoint of its gross-margin forecast to 62%, up from its previous outlook of 60%, driven mostly by a higher volume of PC sales. A year ago, the company's gross margin was 63%.

Shares of Intel rose 2.6% to $37.50 in midday trading in New York. Before Friday, the stock had risen 6% in 2016.

When reporting its second-quarter's results in July, the Santa Clara, Calif., company gave indications that fallout from the declining PC industry is moderating even as more lucrative server-chip sales grew less than expected.

Personal computer shipments continued to fall in the second quarter, research firms International Data Corp. and Gartner Inc. said in July, but the declines were less severe than in recent periods.

The PC industry has been struggling with declining demand for several years in part because of a shift in consumer spending to smartphones. The second quarter was the seventh consecutive quarter that shipments fell. But both firms said that shipments rose in the U.S. market.

Still, Intel's chief executive, Brian Krzanich, has tried to position the company for a new era in which PCs aren't an overriding focus. At present, however, Intel still gets the largest share of its revenue from PC chips. Last quarter, its revenue from the "client" device business that includes PCs declined 3% from the year-earlier period.

Meanwhile, Intel has slashed head count to adjust to weaker sales growth and free up cash to invest in newer businesses.

Intel is set to report earnings for the September quarter on Oct. 18.

Write to Anne Steele at Anne.Steele@wsj.com

(END) Dow Jones Newswires

September 16, 2016 12:00 ET (16:00 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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