Samsung Electronics Co said today that first-quarter net profit fell 15 percent from the same period last year on declines in prices for its mainstay memory chips, The Associated Press said.

Samsung Electronics, the world's largest memory chip manufacturer, earned 1.60 trillion won (US$1.72 billion) in the three months ended March 31, the company said in a statement. Sales rose 3.1 percent to 14.39 trillion won.

Samsung is also a top producer of flat-screen televisions, mobile phone handsets, MP3 players and laptop computers.

The Suwon, South Korea-based company manufactures both DRAM, or dynamic random access memory, chips used in personal computers, as well as NAND chips used in digital cameras and music players.

"DRAM and NAND prices fell too sharply over the first quarter to be offset by our cost reduction efforts," Robert Yi, Samsung vice president for investor relations, told analysts on a conference call. "Of course this a problem faced by all DRAM and NAND producers, not just Samsung Electronics."

The result, the second straight quarterly profit decline, was worse than expected.

The average estimate of 11 analysts surveyed by Dow Jones Newswires forecast that the company would post a net profit of 1.69 trillion won on sales of 14.57 trillion.

Yi said that the bright spot for Samsung during the quarter was its telecommunications business.

Samsung sold 34.8 million handsets, a quarterly record for the company "despite the overall market shrinking more than a little on seasonality," Yi said.

He attributed the increase to strong sales of the company's high-end Ultra edition phones as well as its lower end mass market models.

Samsung Electronics is the word's third-largest manufacturer of mobile phone handsets behind Nokia Corp and Motorola Inc.

Yi said prices for NAND chips are already improving and predicted there will be a supply shortage in the second half of the year. DRAM prices will likely stabilize by the end of the current quarter, he said.

He warned that the company should not be underestimated.

"I believe that investor myopia will not be rewarded," Yi said.