* Chip market slowdown to continue into Q1 2011
* Parts shortage situation is returning to normal
* STMicro says market to grow 5-10 percent next year
* Shares up 3.5 percent to 11-week high
(Adds CEO comments, share price)
PARIS/SAN FRANCISCO, Oct 27 (Reuters) - European chipmaker STMicroelectronics forecast the market would pick up in the second quarter of next year, after posting higher-than-expected quarterly profit that pushed its shares higher on Wednesday.
The current slowdown in demand in the chip market is an "adjustment" rather than a reversal and will continue into the first three months of next year, STMicro Chief Executive Carlo Bozotti said on a conference call.
After strong sales in early 2010, chipmakers have wrestled in recent months with tepid demand and some have warned that growth in the last quarter will be less than in normal holiday quarters.
"It's not so much a slowdown as a return to normal, a return to the long-term industry trend of between 5 and 10 percent growth," Chief Operating Officer Alain Dutheil said on the call.
STMicro forecast the market would grow at that level next year and said it would outpace the market. Bozotti also said the parts shortage situation in the technology sector was returning to normal.
Shares in STMicro were the top gainers on the French blue chip CAC 40 index by 0913 GMT, up 3.5 percent at an 11-week high of 6.116 euros. STMicro posted third-quarter net profit of $198 million late on Tuesday, compared with a net loss of $201 million a year ago and above analysts' expectations of around $183 million, according to Thomson Reuters I/B/E/S estimates. (Reporting by Marie Mawad and Noel Randewich; Writing by James Regan; Editing by David Holmes)