SAN FRANCISCO, April 13 (Reuters) – Intel Corp’s (INTC.O) sales and margin forecasts trounced Wall Street expectations, reinforcing hopes for an acceleration in the tech sector’s recovery and boosting the chip maker’s stock 4 percent.

The stellar showing from the world’s top chip maker, an industry bellwether and among the first tech stocks to report first-quarter earnings, lifted Asian tech shares and should give Wall Street a boost.

Intel, bolstering expectations that businesses and consumers will speed up spending after 2009′s belt-tightening, foresees a gross margin of 64 percent — plus or minus 2 percentage points — for both the current quarter and all of 2010. Wall Street had expected about 60 percent.

That put the company, which said on Wednesday it was seeing increased spending by corporations, on track to potentially surpass the record 64.7 percent margin chalked up in its fourth quarter.

“What Intel is benefiting from is the pent-up demand, because customers delayed upgrading servers and upgrading desktops over the last several years because of the downturn,” ITIC analyst Laura DiDio said. “They can’t delay anymore, so the floodgates have opened.”

Tech sector shares rallied. Fellow chipmakers Advanced Micro Devices Inc (AMD.N) and Texas Instruments Inc (TXN.N) rose nearly 3 percent after hours, while Microsoft Corp (MSFT.O) was up 1 percent. Dell (DELL.O) was up 1.5 percent.

“Certainly a strong indication for the rest of technology as we move through earnings season,” said Edward Jones analyst Bill Kreher of Intel’s results. “The cost control during the downturn is helping set a new norm in terms of gross margins for the company moving forward.”

Intel forecast current-quarter revenue of $10.2 billion, plus or minus $400 million. Analysts polled by Thomson Reuters I/B/E/S, on average, expect $9.68 billion.

Chief Executive Paul Otellini, who predicted as far back as 2009′s second quarter that the PC sector had hit bottom, on Wednesday told investors the battered technology sector was nearly out of the woods. [ID:nN14455703]

“A year ago at this time, the industry was in the midst of a sharp correction, with many expecting it to continue for an extended period,” Otellini said. “But we saw signals of it bottoming then, and now a year later the industry is nearly fully recovered.”

Analysts added that the chip maker’s outperformance will help raise expectations of how fast and how strong the tech industry will rebound from the severe downturn of the past two years.

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For a graphic on Intel earnings,

please click: link.reuters.com/wyk67j

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KNOCK OUT RESULTS

In Taiwan, shares of the world’s top contract chipmaker TSMC (2330.TW) (TSM.N), which also gave upbeat sales forecasts for the global semiconductor market on Wednesday, rose 0.5 percent. [ID:nTOE63D02F]

“It looks like demand remains strong and we don’t have to worry too much about corporate fundamentals,” said John Chiu, a fund manager at Taiwan’s Fuh Hwa Securities Investment Trust. Chiu has no TSMC shares in his portfolios now.

South Korea’s Samsung Electronics (005930.KS) rose 1.7 percent and PC maker Lenovo Group (0992.HK) jumped 3.8 percent.

S&P 500 and Nasdaq index futures firmed, implying gains for both indices on Wednesday.

“Not only is it first to file, it’s also more upstream in the supply chain than other vendors so that bodes well for the entire downstream, the overall sector,” said Endpoint Technologies Associates President Roger Kay.

Intel’s margins should expand — defying fears that they had peaked in 2009′s final quarter — because sales were going to more expensive chips, like servers bought by corporations now less constrained by the tight budgets of last year.

That spending has come at a time when Intel released a flurry of new server, desktop and notebook chips with a focus on speed and performance.

Executives added they were beginning to see growth in business PC purchases and new tablet computers anticipated this year — in the wake of Apple Inc’s (AAPL.O) highly touted iPad — will expand the market in the same way netbooks have.

Dell, Hewlett-Packard (HPQ.N) and other manufacturers are expected to follow with their own. [ID:nN06228078]

“Demand for our higher-end PC products was particularly strong, which helped improve margins and profitability,” Otellini said on a conference call with analysts.

Some analysts had predicted Intel might not see as strong sales in the second half of the year. But Raymond James analyst Hans Mosesmann said unseasonably high gross margins in this beginning of the year boded well for the rest.

“If this continues, you’ll see a second half that’s better than the first half,” he said.

Broadpoint Amtech analyst Doug Freedman said Wall Street is likely to raise financial forecasts for Intel in the wake of the quarterly report.

“I wouldn’t be surprised if Street estimates came up between 8 and 10 percent,” he said.

The company said on Tuesday net income totaled $2.4 billion, or 43 cents a share, in the three months ended March 27, compared with net income of $629 million, or 11 cents a share, in the year-ago period. That exceeded average expectations for 38 cents a share.

Revenue rose to $10.3 billion, above the Wall Street target of roughly $9.84 billion.

Shares of the Santa Clara, California-based company rose 4 percent to $23.66 in extended trading after closing at $22.76 on Nasdaq.

“We’re bringing out a whole generation of … exciting products for the industry and look to be driving more high-end demand than we were anticipating when we started the year,” Intel Chief Financial Officer Stacy Smith said. (Additional reporting by Gabriel Madway, Ritsuko Ando, Sue Zeidler and Baker Li; Editing by Edwin Chan and Lincoln Feast)