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Updated from 8:57 a.m. EDT

The market gave a warm welcome to news that


(QCOM) - Get Free Report

expects strong chip demand for this quarter and the next, with investors pushing the shares up more than 9% Friday. But some analysts were a little less enthusiastic.

The San Diego-based phone-chip manufacturer raised shipment expectations for the fourth quarter to 20 million chips from earlier forecasts of 18 million to 19 million chips. It also raised guidance on its first quarter for 2003, saying chip shipments would be "significantly higher than 20 million." Qualcomm's shares closed up $2.35, or 9.17% at $28.08 on the news.

Many analysts heaped praise on the company, at a time when investors are on the hunt for any good news in the battered sector. "The positive scenario laid out

by analysts in May appears to be coming to fruition, resulting in Qualcomm likely reaching the high end of earnings guidance each of the last two quarters," wrote J.P. Morgan wireless equipment analyst Ed Snyder in a research note. Snyder raised his firm's estimates on the company, as did Bear Stearns, Lehman Brothers, Morgan Stanley and UBS Warburg.

But other market watchers were decidedly skeptical. "We suspect Qualcomm's surge is the result of stuffing the inventory channel to meet nascent demand for next-generation handsets, which is unsustainable," said Morningstar technology analyst Todd Bernier. "Given the slowdown in handset sales at the carrier level, we believe Qualcomm will eventually face a substantial inventory correction."

While Qualcomm continues to fill orders for handset makers, it remains unclear whether carriers, which eventually purchase these phones, will see an increase in demand, driven by the rollout of third-generation, high-speed data networks. For carriers such as

Sprint PCS


, the outlook remains grim.

Qualcomm was unavailable for immediate comment.

"The question I have is where are these new sales

for Qualcomm coming from," said Morningstar's Bernier.

Qualcomm said in a prepared statement that its growth largely will be driven by strong demand in China. "We're seeing strong order input from our customers ... as well as increasing demand for chips destined for the growing China market," said Qualcomm Chief Executive Irwin Jacobs.

But even that premise is being challenged. While growth in China by far outstrips growth in the rest of the world, new-subscriber growth there is beginning to slow, said Deutsche Bank Securities wireless equipment analyst Brian Modoff. On average, China has seen overall subscriber growth of about 5 million customers a month in the first half of the year, but in the second half, growth is forecast at 4 million.

Separately, reports from two of Qualcomm's biggest customers,



LG Electronics

, seem to conflict with Qualcomm's rosy outlook for the final quarter of the year, according to Modoff. He said recent checks with these two clients indicate they are forecasting fourth-quarter handset shipments to be sequentially down from the third quarter.

Also, Bear Stearns analyst Wojtek Uzdelewicz pointed out that according to a CDMA Development Group report, global CDMA 1X subscribers totaled 13.4 million in the second quarter, while Qualcomm shipped 31 million 1X chipsets -- far outnumbering the amount of global subscribers.