UPDATE 2-Toshiba's Q1 profit below estimates as low-priced Chinese phones rise

Thu Jul 31, 2014 5:52am EDT

* Apr-June op profit up 57 pct at Q1 record, below estimates

* Low-priced China smartphones pressure some component makers

* Murata Mfg on track with profit rise, Q1 up 48 percent (Recasts with price pressure on components, adds Murata results)

By Teppei Kasai and Yoshiyasu Shida

TOKYO, July 31 (Reuters) - Japanese electronics conglomerate Toshiba Corp, the world's No.2 maker of NAND memory chips for smartphones, fell short of quarterly profit estimates as the rise of Chinese makers of lower-priced smartphones squeezed prices and profits.

Japanese smartphone display makers have also seen prices and margins pressured as price-conscious Chinese manufacturers gain influence in the industry, although some component makers like Murata Manufacturing Co with differentiated products and high market share remain buoyant.

Toshiba's April-June profit rose 57 percent to 39.5 billion yen ($384.32 million), its highest ever for its fiscal first quarter, although that fell short of the 44.9 billion yen average expectation by seven analysts, according to Thomson Reuters StarMine.

Profit in Toshiba's electronic devices division, dominated by NAND flash memory used to store data in smartphones and tablets, fell 27 percent to 36.6 billion yen in the latest quarter.

Toshiba competes in NAND chips with top producer Samsung Electronics Co Ltd, which on Thursday posted its worst quarterly profit in two years while warning of uncertain earnings prospects in its handset business.

Toshiba Executive Vice President Keizo Maeda told an earnings briefing that memory-chip prices had stabilised, however, and that the market was tightening.

The conglomerate was able to offset the decline in profit in semiconductors with strength in its power generation and infrastructure division, while sharply reducing losses on consumer products like TVs, where it announced a further restructuring including at least 300 job cuts.

The company kept its operating profit target for the year to March 2015 unchanged at a record 330 billion yen.

Murata, which makes tiny electronic parts such as SAW filters and ceramic capacitors and is a supplier for Apple Inc's iPhone, on Thursday posted a 48 percent rise in first-quarter operating profit to 36.9 billion yen, exceeding the average 32.75 billion yen estimate of six analysts. It said it was on track to meet its full-year 144 billion yen profit target.

"Just because we're selling to China doesn't mean we're selling cheaply," Murata Executive Deputy President Yoshitaka Fujita told an earnings briefing.

Toshiba's shares ended 1.2 percent higher before the earnings announcement while Murata finished up 0.7 percent, while Tokyo's benchmark Nikkei average dipped 0.2 percent. For the year to date, Toshiba is up 5 percent and Murata is up 6 percent, outperforming the Nikkei's 4 percent drop.

($1 = 102.78 Japanese yen) (Additional reporting by Yoshiyuki Osada in Osaka; Editing by Edmund Klamann and Matt Driskill)