FormFactor Inc. ( FORM - Analyst Report ) increased its revenue guidance for the second quarter of 2012. Following the news, shares jumped 12.8% in after-hours trade.

The company now expects sales of $50.0 million to $54.0 million, higher than its previous guidance range of $43.0 million to $47.0 million. Management increased its sales figure by $7 million on expectations of strong demand for its memory chip testing products for the computing market.

According to the research firm Gartner, the semiconductor industry is poised for a rebound, starting in the second quarter of 2012. Gartner reckons that PC unit shipments will increase by 4.7% in 2012, with both the DRAM and NAND flash memory markets stabilizing this year.

Hence, the demand from its customers in the DRAM and Flash memory markets will now be stronger than prior expectations, helping revenue growth in the upcoming quarter.

However, company CEO Tom St. Dennis stated that the softness in the personal computer markets and macro uncertainty could restrict results in the second half of the year.

FormFactor is an OEM of wafer probe cards used by semiconductor makers to test integrated circuits. The company reported revenues of $34.8 billion in the first quarter of 2012, up 15.2% sequentially and down 13.9% year over year. The GAAP net loss was $17.5 million compared to a loss of $21.4 million in the year-ago quarter. FormFactor is expected to report second quarter results on August 1, 2012.

The company continues to burn cash despite the relatively strong demand for its specialized probe cards. It also has customer and market concentration that increases execution risks. Increasing competition from Advantest Corp. ( ATE ) and Cascade Microtech Inc. ( CSCD - Snapshot Report ) is also a matter of concern.

However, we remain encouraged by favorable industry conditions and the company’s improving lead times. This is the reason for FormFactor’s Zacks #2 Rank, which translates into a short-term Buy rating.