Intel Corp.'s (INTC) better-than-expected earnings results and outlook offered the best glimpse yet into how the chip giant and sector will fare through the rest of 2009.

In short, the Silicon Valley company said consumers continue to spend on tech products, and Asia is showing some relative strength helped by China's stimulus. Meanwhile, chip inventory levels are returning to more stable levels as customary demand patterns re-emerge.

But not all is good. Business spending is still down, and questions remain about broader economic weakness and whether it could derail a recovery later this year.

So, in review, here's what we've learned and will be monitoring as other chip companies report their quarterly results:

 
  Consumers are spending on tech, but businesses still aren't

Intel said notebook chip shipments saw a rebound in the second quarter, led by continued buying by consumers even as confidence in the economy remains low and unemployment inches higher. Upbeat third-quarter guidance from Intel suggests customers will still grab PCs during the back-to-school season, but some have started to worry about the fourth quarter and the holidays.

The risk, analysts say, is that strong consumer demand - while the economy continues to sputter - could make chip makers vulnerable to a quick belt-tightening, especially as unemployment rises.

"An eventual slowdown in the consumer PC segment could act as an offset even if enterprise PC trends pick up going forward," Robert W. Baird analyst Tristan Gerra said.

A pullback in consumer spending during the next two quarters could return the chip market to a position similar to last year. Specifically, chips sitting on manufacturers' shelves, while chip customers stop buying to deal with overstocked inventories.

Meanwhile, business customers aren't buying much more than servers, and Intel expects continued weakness in this segment through the third-quarter.

Of course, as businesses try to eke out few extra months, or years, from aging desktop and notebook computers, there's likely a buildup in demand occurring, Intel said. The introduction of Microsoft Corp.'s (MSFT) Windows 7 this fall could push more customers to start buying, though it's more likely to happen next year.

 
   Chip inventories in the supply chain are returning to customary levels

Intel inventories dropped by more than $900 million over the last two quarters, suggesting a correction has occurred in the supply chain.

This development adds evidence to the company's assertion in April that the traditional seasonal pattern - where chip sales pick up in the third and fourth quarters as tech companies prepare for higher sales due to back-to-school and holiday shopping - would resume in 2009.

Additionally, Baird's Gerra said chip inventory levels still haven't caught up with end-demand, meaning chip sales could continue to outpace sales of PCs.

 
   The China stimulus program is working and should help other chip makers

The Asia-Pacific region provided solid results, the chip bellwether said, helped by the China stimulus package.

ThinkEquity analyst Vijay Rakesh said that could be good news for analog chip makers, such as ON Semiconductor Corp. (ONNN), Diodes Inc. (DIOD), Monolithic Power Systems Inc. (MPWR) and Maxim Integrated Products Inc. (MXIM), all of which generate a significant portion of their revenues in China.

"China put in place a $464 billion stimulus program with a key focus on infrastructure, consumer electronics, TVs, automotive, with orders continuing to be strong. We believe that in our coverage universe analog players...are all positioned well," Rakesh said.

 
   Intel's best-in-class performance raises the bar

Intel shares recently rose 7.5% to $18.09, leading a rally in the Philadelphia Semiconductor Index, up 3.9% to 280.24. With Intel's blockbuster quarter, the bar is now raised for other chip makers, especially PC chip rival Advanced Micro Devices Inc. (AMD), up 9% Wednesday.

As chip makers follow Intel in reporting second-quarter results - Texas Instruments Inc. (TXN) is the next big gun, on Monday - investors are expecting companies to post numbers near the high end of estimates. Any stumble could mean a quick reversal in stock prices.

-By Jerry A. DiColo, Dow Jones Newswires; 212-416-2155; jerry.dicolo@dowjones.com