As the economy swings from bad to worse and back again, Intel and the techno lust it engenders keep soldering on.

The company’s second-quarter results surpassed Wall Street’s expectations and – despite various warnings of weakening PC demand worldwide – CEO Paul Otellini said in a prepared statement that “As we enter the second half, demand remains strong for our microprocessor and chipset products in all segments and all parts of the globe.”

Later on in a conference call, he said that Intel was aware of issues with the economic environment and was watching the situation very carefully but all he could see was continued healthy demand in the third quarter.

In Q2 the company earned $1.6 billion, or 28 cents a share, up 27% year-over-year, on revenue of $9.5 billion, up 9%, while its operating income came to $2.3 billion, up 67%.

Wall Street, or what’s left of it after the recent carnage, was looking for only a 7% increase in sales and figured Intel would deliver 26 cents.

Granted sales were off 2% sequentially and NOR flash continued to perform abysmally – though less than half as bad as forecast – resulting in a restructuring and asset impairment charge of $96 million, but Intel still reported record sales of mobile chips and chipsets – and chipsets, as Otellini pointed out, are a leading indicator of how MPU sales will go.

Computer makers take the widgets four-six weeks ahead of the processors, one of the reasons Otellini is “very comfortable” with guidance.

Otherwise Intel said total processor units in Q2 were up sequentially and were higher than the seasonal norm.

Its gross margin, a closely watched metric, was 55.4%, up from 53.8% in Q1 – and from a worse 46.9% a year ago  – but slightly below the mid-point of Intel’s expectations, a result,  it said, of rising demand for lower-priced consumer notebooks that resulted in lower-than-expected ASPs, which bothered Wall Street.

Consumer notebooks command less money than business notebooks.

Lehman Brothers analyst Tim Luke figures notebook ASPs were off 5%-6%.

Intel said it should do between $10 billion and $10.6 billion this quarter, in line with seasonality, and see a gross margin of 58% more or less.

Little was said on the conference call about Intel’s server chips and how they’re doing up against AMD’s Barcelona. Notebook chips, up 14% year-over-year in the quarter and now responsible for a third of Intel’s revenues, dominated the conversation and, while reluctant to claim share wins, it was obvious Otellini felt Intel had left AMD in the dust.

Mobile chips, he said, would continue to command premium prices for the foreseeable future compared to desktop parts but their prices are declining. On the other hand, demand expanding.

Demand for the low-end Atom chip for the newfangled netbooks and such is apparently exceeding Intel’s wildest expectations and the company constantly has to reiterate its position that the widget won’t cannibalize the traditional Centrino notebook market and further depress ASPs and gross margin.

Otellini is now pretty positive Intel has stumbled on a “new market segment” that’s too low-powered to replace Centrino and expects Atom to smooth over any rough spots encountered in the space between falling Centrino prices and widening notebook demand.

Otellini didn’t say anything about Atom dislodging low-end Celerons; Atom, while cheaper, is supposed to have better margins than Celerons. The upgrade from Atom will be the new Centrino 2.

Luke figures nine million-11 million Atom-based notebooks could be sold this year; Asus with the Eee and Acer are already in and Dell and Lenovo are expected to enter the market this quarter. He also thinks HP may abandon its Via-based notebook in favor of Atom this quarter.

Atom numbers are expected to be broken out this quarter and could include $300 million-$400 million in Atom chipset sales.

Otellini said 45nm yields and throughput was proving better than 65nm and is translating into cost savings.

In Q2 Intel’s sales in North America were up 8.9%, EMEA up 17%, Asia Pacific up 7.8% and Japan up 2.6%. It is now getting around 75% of its revenues from overseas.