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TAIPEI/SEOUL, Mar 21 (Reuters) Samsung Electronics Co. Ltd. expects flash memory chip prices to stabilise at the end of the second quarter, a top executive said on Tuesday, as demand for the chips used in MP3 music players and digital cameras recovers.

With demand for portable consumer gadgets slowing, prices of NAND-type flash memory have fallen sharply in recent months, clouding the outlook for top memory chip makers including the biggest manufacturer Samsung and second-ranked Hynix Semiconductor Inc.

''Flash memory prices will stabilise at the end of the second quarter because demand is strong this year,'' Hwang Chang-gyu, president and chief executive officer of Samsung's semiconductor business told a Samsung forum on Tuesday in Taipei.

Hwang expected demand for NAND chips for high-end mobile phones and portable music players to lead the recovery.

''Slow seasonal demand, coupled with the stronger won currency, is having a larger-than-expected impact on Samsung's earnings,'' said Jay Kim, an analyst at Hyundai Securities.

''But falling flash memory prices will boost demand and lead to a sharp growth in shipments in the second half.'' In a news conference late on Monday, Twang forecast first-quarter profits in Samsung's semiconductor business would be lower than the fourth quarter due to weak NAND chip prices, but added chip revenue would match the previous quarter.

Hwang did not provide specific estimates for profits or sales.

Samsung's semiconductor division posted 1.62 trillion won ($1.67 billion) in operating profit on 5.09 trillion won in sales in the fourth quarter of 2005.

''Samsung's earning could come below expectations,'' said Kim Seong-ki, chief investment officer at Chohung Investment Trust Management. ''There are also worries about (NAND) demand from companies like Sony.'' Samsung has been in talks to sell NAND flash memory chips to Sony Corp., but there has been no decision announced.

A Samsung executive told Reuters earlier in March the company expected prices of NAND flash memory to fall less than 20 per cent in the first quarter.

In contrast, Samsung has enjoyed stronger-than-expected prices of computer memory chips in the first quarter which analysts expect to partly offset the weaker NAND business.

The company is also increasing production of more profitable graphic and mobile chips for game consoles and wireless devices.

Shares in Samsung, the most valuable technology firm in Asia, fell 0.47 per cent to end at 635,000 won, compared with the wider market's 0.75 per cent gain.

($1=970.8 Won) REUTERS SD RK1440