(Reuters) - GlobalFoundries ( GFS ) forecast second-quarter revenue above Wall Street estimates on Tuesday, betting on improving demand for semiconductors after a years-long slump that was caused by surplus inventory at its customers.

Shares of the contract chipmaker rose 4.2% before the bell.

The upbeat forecast is the latest positive sign for the industry after earnings of chip firms including NXP Semiconductors ( NXPI ) and Texas Instruments ( TXN ) showed that demand was picking up, aided by orders from the industrial sector.

"Pockets of the semiconductor industry" have started to emerge from inventory corrections, GlobalFoundries ( GFS ) CEO Thomas Caulfield said in a statement.

The company expects revenue in the current quarter to be between $1.59 billion and $1.64 billion, the midpoint of which was higher than the LSEG estimates of $1.59 billion.

Its adjusted earnings per share forecast in the range of 24 cents to 34 cents for the second quarter was also above analysts' view of 27 cents.

GlobalFoundries ( GFS ) - the world's third-largest contract chipmaker - had won $1.5 billion in subsidies from the U.S. government earlier this year, which it plans to use for the construction of a new semiconductor production facility in Malta, New York and expand existing operations there and in Burlington, Vermont.

For the first quarter, the company reported revenue of $1.55 billion, which was higher than expectations of $1.52 billion. Its adjusted profit per share of 31 cents also beat estimates.