NEW YORK (CNN/Money) - Texas Instruments Inc. narrowed its sales and earnings targets for the third quarter Tuesday.

The world's largest maker of semiconductors used in cell phones said it now expects sales to be in a range of $2.39 billion-to-$2.49 billion. When Texas Instruments announced second-quarter results in July, it said it expected third-quarter sales of $2.29 billion-to-$2.49 billion. The consensus estimate was $2.4 billion, according to First Call.

TI also said it expected earnings per share, excluding a 13-cent-a-share gain from a sale of Micron Technology stock and other items, to be in a range of 7-to-9 cents a share, compared with its earlier guidance of 6-to-10 cents a share. Analysts have split the middle and expect TI to report earnings of 8 cents a share for the quarter, according to First Call.

Shares of Texas Instruments (TXN: Research, Estimates) fell 71 cents, or 2.7 percent, to $25.32 in regular trading on the New York Stock Exchange Tuesday and fell another 3.3 percent in after-hours trading according to Island ECN.

The company did say, however, that it was seeing increased demand for a broad range of its semiconductor products. And the midpoint of its new sales range is $2.44 billion, slightly higher than Wall Street's consensus estimate.

Patrick Ho, an analyst with tech research firm Moors & Cabot said that TI's news was not a major surprise but that it is further evidence that the market for cell phone equipment companies may be improving.

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Although cell phone market leader Nokia (NOK: Research, Estimates) disappointed Wall Street Tuesday by saying that its sales would be flat-to-down in the third quarter due to competitive pricing, Nokia did say that demand was growing and that the number of cell phones shipped should increase by more than ten percent, which is good news for suppliers like TI, Ho said.

During a conference call Tuesday, TI chief financial officer Bill Aylesworth confirmed this, saying that it started to see a pickup in demand from wireless customers in June and that it has continued going into the fall.

But chip stocks have been among the best performing sectors this year and TI is no exception. The stock is up nearly 70 percent year date. Following an increase in third quarter sales guidance by chip leader Intel last month and the subsequent tightening of that guidance last week, investors might have been hoping for TI to boost the upper end of its earnings and sales ranges.

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In addition, another semiconductor company, programmable microchip manufacturer Xilinx (XLNX: Research, Estimates), reaffirmed (but did not raise) its sales targets for its fiscal second quarter Tuesday, which seemed to dampen investors' mood somewhat. Shares of Xilinx tumbled 3.6 percent after hours.

"Frankly, a lot of semiconductor stocks are priced to perfection and in the absence of really positive news, the stocks are a little overdue for a pullback," said Eric Rothdeutsch, an analyst with Friedman Billings Ramsey.

Analysts quoted in this story do not own shares of companies mentioned in this piece and their firms have no investment banking relationships with the companies.