UPDATE 1-STMicro rallies on report of breakup

Fri Oct 12, 2012 8:28am EDT

* STMicro declines to comment

* STMicro has said plans new strategic plan in December (Adds background, updates shares, Paris to dateline)

MILAN/PARIS Oct 12 (Reuters) - Shares in STMicroelectronics rallied more than 17 percent on Friday after Bloomberg reported Europe's top semiconductor maker was considering a breakup that could lead to the sale of its struggling mobile-phone chip business.

STMicro declined to comment on the report. The maker of chips for mobile phones and computers has said it will unveil a new strategic plan in December to tackle softer demand and the changed needs of some of its customers.

Bloomberg cited Samsung Electronics as a potential buyer for STMicro's digital assets. The sale would allow the company to focus on its semiconductors business, the news agency said.

As of 1220 GMT, shares in STM were up 11.6 percent in Milan and 11.8 percent higher in Paris. The stock was up 14 percent in pre-market trading in New York.

STMicro, which competes with microchip maker Analog Devices Inc and Texas Instruments Inc, had said in July that the global economic environment had weakened. (Reporting by Valentina Caiazzo; Writing by Lisa Jucca and Dominique Vidalon; Editing by James Regan)

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