Intersil Corp. (ISIL) recently raised its revenue expectations for the third quarter from $123-132 million to $145-148 million. The increase was driven by stronger demand in the consumer and computing markets.

The announcement does not come as much of a surprise since management of other companies in the sector, such as Maxim Integrated Products Inc. (MXIM) and Linear Technology Corp. (LLTC), had given prior indications. We were thus able to gather that channel inventories had been lowered significantly during the fourth quarter of 2008 and the first quarter of 2009. This basically meant that sales were likely to track consumption going forward.

We also note that Intersil has a well-diversified business, where the first half of the year is typically driven by the industrial and communications markets, while the second half is driven by computing and consumer.

The computing market will benefit from channel partners building inventory to more normal levels, in addition to the normal back-to-school demand. The holiday season usually boosts consumer market sales in the second half, and there will be relative strength this year as a result of increased consumer confidence. It is a big positive that a portion of the company’s business enjoys seasonal strength during the second half, when the country is expected to start heading out of the recession.

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