(Adds comment from executive, details on outlook)
SAN FRANCISCO, April 3 (Reuters) - Memory chip maker Micron Technology Inc posted better-than-expected fiscal second-quarter results and said the outlook for the memory industry is favorable as it switches production lines to make NAND chips used in smartphones and tablets from making DRAM chips for personal computers.
Prices for DRAM chips made by Micron, Samsung Electronics and SK Hynix have bounced back from a deep memory chip price slump in 2012 that led some chipmakers to throttle back production.
"They're executing pretty well in an improved memory market," said Pacific Crest analyst Monika Garg. "DRAM was much better than expectations. On the NAND side they're facing a slightly higher average selling price decline but I think that's expected."
The Boise, Idaho company said that in the current quarter, average selling prices for its DRAM and NAND chips would likely decline by a low single-digit percentage.
Micron's stock has surged over 160 percent in the past 12 months, helped by the recovery in memory chip prices as well as news in November that David Einhorn's hedge fund Greenlight Capital had invested in the company.
Micron's quarterly results include bankrupt Japanese DRAM maker Elpida Memory, which the U.S. chipmaker acquired in July 2013 in a bid to improve economies of scale.
Micron believes that reducing the number of players competing in the memory chip industry will put an end to extreme price volatility that in difficult years has left the company reporting losses and driven smaller competitors out of business.
"The industry is mature enough that people don't want to lose money anymore. There's just not any irrational money coming in to add supply and bring the whole industry down," Micron President Mark Adams told Reuters. "The parties who may be interested have been burnt pretty badly."
Declining sales of personal computers have hurt demand for DRAM chips. In response, Micron has been focusing more on specialized DRAM for smartphones and tablets, as well as converting DRAM production lines to make NAND chips used to store data like music and photos on mobile devices.
NAND chips have also been making inroads into data centers and high-end laptops, where they can replace traditional hard disk drives and enable "instant on" performance similar to tablets.
In the short term, Micron is more optimistic about for DRAM chips than NAND chips due to imbalances between supply and demand, Adams said. But in the long-term, NAND chips have more growth potential, he said.
Micron on Thursday reported a net profit of $731 million, or 61 cents per share, in the quarter ended Feb. 27, compared with a loss of $286 million, or 28 cents, a year earlier.
Excluding items, Micron earned 85 cents per share, better than the 76 cents expected by analysts, according to Thomson Reuters I/B/E/S.
Revenue rose 98 percent to $4.11 billion. Analysts an average expected revenue of $3.985 billion.
Shares of Micron were up 0.3 percent in extended trade after closing down 1.44 percent at $24. (Reporting by Noel Randewich; Editing by Bernard Orr)