Seeing strong demand for handsets and chips, Qualcomm is increasing its outlook for the fourth quarter ending Sept. 25. The company's shares were up slightly on the news.

Qualcomm expects to post fourth-quarter ending revenue between $1.48 billion and $1.58 billion. In a previous guidance, the company said it was anticipating revenue to come in between $1.43 billion to $1.53 billion. The revised forecast represents an 8% to 15% increase year-over-year, the company says.

It expects fourth-quarter earnings of 32 cents to 33 cents a share, excluding certain items, which is up from its earlier forecast of 29 cents to 31 cents a share.

"3G CDMA market momentum is strong," CEO Paul Jacobs said in a prepared statement, noting that during the June quarter, a sequential increase was seen in both CDMA and WCDMA handset shipments. "The increase of 3 to 4 million handsets, as compared to our prior guidance, is primarily attributable to greater CDMA2000 handset shipments in North America, Latin America and the rest of the world," he said.

Qualcomm is now calling for 48 million CDMA and WCDMA units to ship during the fourth quarter, up from a guidance of 43 million to 45 million. The company did decrease its forecast for the average selling price of these units to about $213 from $215.

In terms of chips, Qualcomm expects to ship roughly 40 million MSM phone chips, which is at the high end of a previous forecast calling for shipments between 38 million and 40 million. The increase guidance also bumped up the company's outlook for pro forma diluted earnings per share, which Qualcomm now expects to be in the range of 32 cents to 33 cents.

Goldman Sachs analyst Brantley Thompson upgraded Qualcomm this week to "Outperform" from "In Line," noting the CDMA pioneer should benefit from 3G adoption in Europe.

At one point Qualcomm shares were up 56 cents to $43.98.