The market for the NAND-type chips grew 65% to $10.9bn (£6bn) in 2005, according to industry estimates.

Toshiba is the world's second largest producer of these chips, with a 19% share of the market compared with South Korea's giant Samsung which has almost half of the market.

'Demand healthy'

A supply surplus saw the price of the chips fall in the first three months of 2006, but Toshiba's senior executive vice president Sadazumi Ryu said the impact had been minimal.

"Demand remains healthy as new NAND applications such as mobile phones with an audio player function emerge," Mr Ryu said.

Brisk sales in its personal computers and medical equipment businesses also buoyed Toshiba, which saw final quarter profits climb 16%.

Overall sales rose 8.7% to 6.34 trillion yen.

However, its expectations of 90bn yen net profit for the year to March 2007 falls below the market consensus of 95.3bn yen.

Earlier this month, Lexar Media escalated a patent spat with Toshiba, calling for the US to ban imported memory cards that are made by its Japanese rival.

The row stems from a 2005 court case in which Toshiba was found guilty of stealing Lexar's trade secrets. Toshiba is appealing against the verdict.

In February, Toshiba agreed to buy the US power plant arm of British Nuclear Fuels, Westinghouse, for $5.4bn - further reducing its reliance on consumer electronics.

Analysts claim that the move is a pre-emptive step taken by the group to defend itself against any unsolicited takeovers in the future.

Before its annual results were announced, Toshiba shares closed down 0.68% at 725 yen.