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As iPhone 8 looms, firms scramble to lock up memory chip supply

FILE PHOTO: The Apple logo is pictured on the back of an iPhone, in this illustration photo taken in Bordeaux, France, February 1, 2017.

Global electronics makers are scrambling to stock up on memory chips to keep production lines running as Apple Inc's (AAPL.O) new iPhone 8 launch later this year threatens to worsen a global squeeze on supply.

While heavyweights such as Apple and Samsung Electronics Co Ltd (005930.KS) - which is also the world's top memory chip maker - will not be seriously hit, industry sources and analysts say some electronics makers are paying a premium to lock into longer-term contracts.

Others are placing orders earlier than before to ensure their perilously low inventories do no dry up completely.

"After the supply shortages emerged we brought forward our procurement decisions ... to ensure a stable supply," smartphone and personal computer maker LG Electronics Inc (066570.KS) said in a statement, adding it had pushed up quarterly purchase decisions by about a month.

Chip manufacturing technologies are growing increasingly complex, raising investment costs yet providing less output growth as some suppliers struggle to improve yields. This has caused some chip prices to double or triple from a year earlier.

Some analysts say device makers could be forced to cut down on the amount of DRAM chips, which help devices perform multiple tasks at once, or NAND chips that are used for long-term data storage, on new products if the cannot get enough chips.

A chip supplier source told Reuters a handful of clients have moved to 6-month supply...


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