UPDATE 1-STMicro cuts dividend by two-thirds

* STMicro plans quarterly dividend cut to 3 cts vs 9 cts

* Says move is temporary due to "unstable market"

SAN FRANCISCO, April 15 (Reuters) - Chip maker STMicroelectronics NV (STM.PA) plans to cut its quarterly dividend by two-thirds, citing the "unstable market."

The company said on Wednesday its supervisory board approved a proposal to pay a 3 cent per share quarterly dividend to shareholders over a period of four quarters, versus the 9 cent quarterly dividend paid in the last 12 months.

The reduced dividend, which STMicro said was temporary, would take effect in the second quarter. The company said it would submit a proposal for the new dividend at its shareholder meeting in Amsterdam on May 20.

"As we navigate the current macroeconomic environment, we have decided to maintain our dividend policy involving the distribution of a cash dividend, but are proposing on a temporary basis to reduce its level, reflecting today's unstable market," Chief Executive Carlo Bozotti said in a statement.

The proposed dividend equals a 2 percent yield on the Geneva, Switzerland-based company's closing price on the New York Stock Exchange on Tuesday, it said.

The U.S. shares of STMicro fell 9 cents to $6.05 in after hours trade on Wednesday. (Reporting by Alexei Oreskovic; Editing by Richard Chang)