By Chris Lau for Kapitall. Strong growth in tablets and smartphones led many to declare the PC dead. This is a mantra that is untrue, however. How is it that the PC market is back, and what should investors do about it? Intel upbeatIntel (INTC) forecast gross margin will improve from the sub 60% level in Q1 to between 62% – 66% in the second quarter. The company said in its press release: "The full-year gross margin percentage is now expected to be in the upper half of the previous range of 61 percent, plus or minus a few percentage points, driven mostly by expected improvements in unit cost and volume.” Operationally, Intel is benefiting from higher manufacturing efficiency and stronger demand. The inevitable end of support for Windows XP, Microsoft’s ( MSFT) operating system, will clearly help Intel in the next few quarters. Demand for Windows is tepid, but should improve as consumers and businesses upgrade to Windows 7 or 8. Both Intel and Microsoft shares are already up in the last year: Investors holding Microsoft or Intel are rewarded a dividend yielding 2.74% and 3.29%, respectively. Intel updates chipset Last month, Intel updated the motherboard chipset so that it would support higher speeds for storage (SATA Express and M.2). The integrated graphics chip is improved (HD Graphics 4600), while its high end Core i7-4790K will start with a clock speed of 4Ghz. Competition from AMD For now, competition from Advanced Micro Devices ( AMD) is minimal for Intel, but that could change. Intel lost an appeal to reverse a 1.06bn fine against the firm, but technology has changed substantially since the days Intel gave rebates to PC makers to discourage them from using AMD. AMD is now entering the semicustom chip market, supplying chips for consoles, and developing ARM chips for the server market. Intel still needs to offer power efficient server solutions that match the ARM architecture. Investors are betting ARM Holdings ( ARMH) and AMD have a bright future, based on their price of profit values: Bottom line Chip makers reliant on a rebound in the PC market are at the middle phase of the recovery. Investors should expect these companies to continue to offer a good return in the next few quarters.