How about:
BEGIN TRAN
UPDATE dbo.tbl SET
AC=LEFT(RTRIM(LTRIM([Phone_Number])),3),
Number=RIGHT(RTRIM(LTRIM([Phone_Number])), LEN(RTRIM(LTRIM([Phone_Number])))-3)
WHERE LEN(RTRIM(LTRIM([Phone_Number])))>3
COMMIT TRAN
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