Chinese smartphone manufacturers are turning to the secondary market for memory chips due to record price hikes and supply shortages. Companies are sourcing components from recycled electronic waste, including used iPhones, to equip new devices.
The secondary market in Shenzhen has seen a surge in demand, with individual memory chips selling for as much as $75. These recycled components are primarily intended for budget-friendly smartphones rather than flagship models.
Recycling firms are actively purchasing faulty devices to harvest functional parts. For instance, one company bought 1000 broken smartphones in March, successfully extracting usable components from over 600 of them.
The cost to acquire a faulty smartphone in China is approximately $15. This price point makes the extraction and resale of memory chips a viable business model under current market conditions.
The practice faces technical and economic hurdles, including the risk of component failure, the high cost of testing and preparation, and potential compatibility issues with new hardware.
Industry experts suggest that this trend is temporary. As the supply of new memory chips increases and prices stabilize, the economic incentive for using recycled components is expected to diminish.
