UPDATE 1-Toshiba to raise chip output in July - NHK

* Toshiba shares gain 2 percent

* Move would be in line with signs of industry pick-up

TOKYO, May 29 (Reuters) - Japan's Toshiba Corp (6502.T) plans to raise its chip production in July to levels not seen since it implemented output cuts in January, national broadcaster NHK reported on Friday, in a move that would reflect an improvement in nationwide output levels. [ID:nT338777]

Shares of Toshiba, the world's second-largest maker of NAND-type flash memory chips after South Korea's Samsung Electronics (005930.KS), gained 2.0 percent to 355 yen, outperforming a 0.1 percent rise in the Nikkei stock average .N225.

"Manufacturers have been reversing production cuts, not only in the tech sector but also at carmakers, with inventory levels falling. So (Toshiba's reported plan) is in line with the direction of the broader industry," said Kazuhiro Takahashi, market analyst at Daiwa Securities SMBC.

Toshiba has decided on the move after reducing inventory and in view of signs of a recovery in overseas demand for chip use in mobile phones, NHK said.

A spokesman at Toshiba said the company was checking the report.

Toshiba will keep reviewing production levels as it does not yet see a strong recovery in demand, said NHK, which did not specify exactly what level of chip production the company would aim for.

NHK said Toshiba would achieve the production hike by adopting longer working hours for its employees rather than by hiring more workers. (Reporting by Yumiko Nishitani; Editing by Hugh Lawson)