Intel’s fourth quarter profits jumped by 48 percent, despite weak PC demand, and the company’s near absence in the booming smartphone and tablet PC processor segment. The company also projected a rosy picture for this year with higher sales and better margins.

Strong demand from the server market saw the company posting a net profit of $3.4 billion (£2.1 billion) for the last quarter of 2010, compared to $2.3 billion (£1.42 billion) the previous quarter. Revenues were up by 8 percent to $11.5 billion over same period last year, beating street expectations.

The company claimed that 2010 was its best year in history.

Demand for Intel’s PC processors was flat for the year; however, chip demand for servers used in data centers increased by 15 percent in the October-December 2010 period.

Intel’s net profit for 12 months in 2010 nearly trebled to $11.7 billion, compared to $4.4 billion recorded in 2009.

Earlier this week Intel had agreed to pay graphics processor leader Nvidia $1.5billion to use its technology in developing Intel’s own microprocessors.

The deal will give Intel an advantage in the handheld devices market such as tablet PCs, smartphones and hand-held computers, analysts believe.