SEOUL (Reuters) - Samsung Electronics Co Ltd (005930.KS), the world's top maker of memory chips, posted a lower-than-expected rise in second-quarter profit amid a sluggish chip market and declining margins in flat screens and handsets.

The South Korean company, also the world's top maker of liquid crystal display (LCD) screens, faces a tougher second half with a steep downturn likely in the display sector, slowing sales of high-end phones and continued weakness in chips.

Next year looks little better, with a global economic slowdown set to impact all consumer electronics, from flat-screen TVs to mobile phones and personal computers.

Shares in Samsung, valued at about $85 billion, tumbled 4.07 percent to 589,000 percent at 0059 GMT, against the wider market's (.KS11) 1.4 percent loss.

April-June net profit was 2.14 trillion won ($2.12 billion) versus 1.42 trillion won a year ago during a market slump for dynamic random access memory (DRAM) chips used mainly in personal computers.

The result missed a forecast for 2.30 trillion won from 10 analysts polled by Reuters.

Samsung had earned 2.19 trillion won in January-March.

April-June operating profit rose to 1.89 trillion won from 911 billion won a year ago, below the 2.08 trillion won predicted by analysts. First-quarter operating profit was 2.15 trillion won.

The operating margin in Samsung's semiconductor unit rose to 6 percent from 4 percent in the first quarter.

While makers of DRAM chips had hoped that spending cutbacks from cash-starved chipmakers and improving demand ahead of the gift-giving season would trigger a recovery in the second half, prospects for a significant rebound this year are fading.

Steep price drops have also hurt earnings from NAND flash memory chips, used in digital cameras and portable music players.

Samsung's display division posted a strong quarter helped by robust sales of flat-screen TVs. The division's margin was 21 percent versus the first quarter's 23 percent.

Samsung, second only to Nokia (NOK1V.HE) in the handset market, sold 45.7 million phones in April-June, a slight decline from 46.3 million in January-March. Mobile margins fell to 13 percent from the first quarter's 15 percent.

Full-year net profit is expected to rise by nearly a third to 9.77 trillion won, according to Reuters Estimates.

April-June revenue was 18.14 trillion won, compared with 14.63 trillion won a year ago and 17.11 trillion won in the first quarter.

(Additional reporting by Kim Yeon-hee and Miyoung Kim, Editing by Jonathan Hopfner and Ian Geoghegan)