West Ham's £90m valuation of Rice is believed to be a factor while manager Ole Gunnar Solskjaer is also said to be a big fan of Phillips.
Old Trafford chiefs do not think Rice is worth what would be a club record signing and are now prepared to look elsewhere when it comes to filling the position.
Phillips is said to have been identified as a prime target, with Solskjaer keen to bring in a new defensive midfielder next summer following criticism of Fred, Nemanja Matic and Scott McTominay this season.
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