Samsung Electronics, the world's top maker of memory chips and LCD screens, expects rapidly recovering demand for its premium computer memory chips and flat TVs to drive growth this year, in an ominous sign for its Japanese rivals.

South Korea's biggest company swung to a quarterly operating profit, meeting its own forecast and slightly ahead of market forecasts, as the tech sector recovery boosted chip prices and shoppers snapped up TVs and mobile phones.

The company said it expects to at least maintain the 10 percent profit margin in mobile phones it achieved last year, projecting a double digit margin in 2010.

But the rising won currency and deepening competition in smartphones pose challenges, while Japanese TV rivals such as Sony Corp and Panasonic Corp are beefing up their line-ups to try to claw back market share.

Its bigger rival in mobile phones, Nokia, reported forecast-beating earnings on Thursday, while Motorola turned a small quarterly profit but predicted a loss in the current quarter.

Samsung reported on Friday a 3.7 trillion won ($3.21 billion) operating profit in the fourth quarter to December, beating a consensus forecast for 3.58 trillion won profit from Thomson Reuters I/B/E/S.

The result was exactly in line with the company's own forecast earlier this month.

Samsung shares were down 1.9 percent at 793,000 won after the result, a slight improvement on earlier trading colored by a weak finish for U.S. tech stocks after Motorola's disappointing forecast.

The consolidated-basis results improved from a 0.74 trillion won operating loss a year earlier but fell from 4.23 trillion won earned in July-September.

Fourth quarter sales rose 19 percent to 39.2 trillion won.

Samsung, also the world's biggest TV brand and No. 2 mobile phone maker, is set to enjoy a broader recovery in electronics demand, after it swiftly pulled out of the global downturn last year, grabbing a bigger market share and technological lead.

Strength in memory chips is expected to continue as PC demand recovers and makers have reined in new investment. Robust demand for flat-screen TVs, notably in China and also in the recovering developed markets, will also help.

Hynix Semiconductor Inc, No. 2 in memory chips, last week reported a higher-than-expected quarterly profit and forecast a further recovery in the sector.

Shares in Samsung shot up 77 percent last year, well ahead of the broader market's 50 percent gain, but underperformed in the fourth quarter on concerns about a strengthening Korean won hurting exports.

(Reporting by Rhee So-eui; Writing by Sonali Paul; Editing by Dean Yates and Jonathan Hopfner)

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