Royal Philips Electronics NV, the third-biggest European semiconductor maker, said in a statement: "The order book for the fourth quarter is progressing well, with the business on track to being profitable in the fourth quarter."

The group said that it expected third-quarter growth in semiconductor sales, excluding those for mobile displays, to beat an earlier forecast of three percent by several percentage points.

Philips also said it expected to take 150 million euros (169 million dollars) in restructuring charges in the third quarter at its semiconductors division for the shutdown of two US factories, and for measures to focus research and development spending and simplify the organisation. This charge was previously expected to be 120 million euros.

The company said it continued to make good progress in cutting its research and development costs through sharper focus on spending, and was adapting production capacity as part of the business' asset-light strategy.

Investors welcomed the news and Philips shares were showing a gain of 3.64 percent at 21.94 euros in mid afternoon trading while the AEX index of leading Dutch shares edged higher 0.12 percent.

One trader said: "As we had previously believed, the turnaround at Philips Semis continues on schedule and we believe management are doing a good job in returning the business to profitability this year."

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