Intel reported $2.3 billion in profit for the fourth quarter of 2009, in a strong financial showing driven by an increase in spending on PC and server chips.

On a GAAP (generally accepted accounting principles) basis, Intel's net income was up 875 percent compared to the $234 million the company reported in the same quarter last year. Fourth quarter 2008 results were affected by the recession and by nearly $1 billion in investments Intel made in Clearwire.

The most recent quarterly results beat estimates of $1.92 billion from analysts polled by Thomson Reuters. Earnings per share on a GAAP basis were $0.40 for the quarter.

Revenue for the quarter, which ended Dec. 26, was $10.6 billion, a 28 percent gain compared to the same quarter last year. Revenue also beat analyst estimates of $10.17 billion.

Excluding a $1.25 billion payment Intel made in November to Advanced Micro Devices to settle antitrust and patent disputes, Intel's profit for the fourth quarter was $3.1 billion, up 267 percent year-over-year.

"The fourth quarter was a strong ending to a year with a very difficult beginning," said Stacy Smith, Intel's chief financial officer, in a statement. The company is seeing consumer demand return after a precipitous drop at the end of 2008 and early 2009, he said.

Intel expects revenue for the first quarter of 2010 to be $9.7 billion, plus or minus $400 million, the company said in a statement. The company earlier this month announced its first chips made using the latest 32-nanometer manufacturing process. The highly integrated Core i3, Core i5 and Core i7 chips for desktops and laptops bring better graphics capabilities and system performance to PCs while consuming less power.

The launch of 27 CPUs at the Consumer Electronics Show was the biggest consumer chip launch since Centrino in 2003, Intel CEO Paul Otellini said during a conference call. "Early demand for these products is excellent," Otellini said.

The company is increasing manufacturing capacity to make more chips using the 32-nm process. Intel plans to refresh its server CPU line with 32-nm chips in the first half of this year, Otellini said. Intel's current server chips include the quad-core and six-core Xeon chips, made using a 45-nanometer process.

The eight-core Nehalem-EX processor will also be released in the first half of the year, Otellini said. That chip will be manufactured using a 45-nanometer process.

Otellini predicted robust growth in shipments across all chip segments, which should keep its factories at full capacity. Demand for more chips in the channel will be a big factor in reducing manufacturing costs, he said.