"We believe that by creating two independent companies, we will be able to better unlock the value of Motorola's existing businesses," chairman and chief executive Christopher Galvin said in a statement.

Motorola stock leapt 97 cents, or 7.9 percent, to 13.25 dollars in the first few minutes of trade.

Galvin, the Motorola founder's grandson, announced only two weeks ago he was resigning after a clash with the board.

He has led a dramatic restructuring of the company, axing one-third of the workforce to return it to profitability. But critics have charged him with reacting sluggishly to reform.

After a four-month strategic review, Galvin said he had recommended to the board in September that Motorola's semiconductor business could prosper as a separate entity.

"Motorola's board of directors has accepted management's recommendation," said John Pepper, presiding director of Motorola's board.

Motorola was considering making an initial public offering for a portion of the semiconductor business, and then dividing up the rest of the stock between shareholders, the company said.

Further financial details were not available.

After the division, Motorola would stick to making mobile telecommunications handsets and infrastructure, radio and cable communications equipment, and car electronics.

With its own publicly traded stock, meanwhile, the semiconductor business would be able to pursue acquisitions of strategic product lines and technology, the company said.

"In addition, the semiconductor industry cycle appears to be in an upswing; therefore, Motorola believes the time is right to take these actions," it said.

The Motorola semiconductor business has struggled for years and analysts say it will have a better chance of selling semiconductors to Motorola competitors as a separate entity.

The spinoff also would remove operating losses in semiconductors from the core Motorola business, said AG Edwards and Sons communications equipment analyst Greg Teets.

The Motorola name had presented an "inherent conflict" when the company was selling semiconductors to rivals such as Siemens or Asian manufacturers, Teets said.

"This eliminates that inherent conflict," he said.

Cynthia Meng, an industry consultant at Adventis, agreed.

"If they spin off the company they have a better chance to get contracts from the other telephone vendors, like Nokia or the Chinese vendors," she said.

"The timing is good for the spinoff, for three months the fundamentals of the semiconductor business have been improving."

Motorola's sales in 2002 amounted to 27.3 billion dollars. Its semiconductor products sector (SPS), the world's biggest maker of embedded processors, posted global sales in that year of 4.8 billion dollars.

"We are embarking on the creation of a new company, and we are excited about the opportunity ahead of us," said Scott Anderson, president of Motorola

"We believe SPS is well positioned to increase its leadership in the end markets it serves, including the networking, communications, transportation and industrial markets."

SPACE.WIRE