Japan's Toshiba Corp., the world's No.2 maker of flash memory chips, posted a 1.6 percent rise in quarterly operating profit on Friday and raised its first-half forecast as chip prices recover.

Toshiba and rival Samsung Electronics Co. Ltd. are betting on solid prices of flash memory and system chips for new digital music players, multimedia cellphones and games from customers such as Apple Inc. and Nokia

Analysts expect earnings at Toshiba, which also competes with General Electric in nuclear reactors, to beat the company's current full-year outlook of an operating profit of 260 billion yen ($2.2 billion), short of a consensus estimate of 277.1 billion yen by 14 analysts polled by Reuters Estimates.

The average price of Toshiba's NAND-type flash memory remained level in April-June from the previous quarter. Toshiba may need to revise up its expectation for a 50 percent annual fall in prices of NAND for the business year, said Executive Vice President Fumio Muraoka.

We are reviewing and recalculating our full-year projections, and will announce new forecasts at a later date, Muraoka said at a news conference.

Toshiba, the world's second-biggest maker of NAND-type flash memory after Samsung, reported an operating profit of 21.18 billion yen for the April-June quarter, compared with 20.84 billion yen a year earlier.

Toshiba, whose chips earned half its profit last business year, posted a net profit of 20.6 billion yen for April-June, a five-fold increase from 4.04 billion yen a year earlier, after booking proceeds from selling an office in South Korea.

Ahead of the announcement, shares of Toshiba closed down 3.1 percent at 1,115 yen, compared with Tokyo's electrical machinery subindex which fell 2.8 percent.

Toshiba bought a 77 percent stake in Westinghouse, the U.S. power plant unit of British Nuclear Fuels, late last year and is eyeing growing demand for nuclear power worldwide.

Shares of Toshiba rose 36.6 percent in April-June, beating the subindex, and have since climbed to a seven-year high on steady NAND prices.

Japan Electronics