[News] Chinese Phone Makers Eye Salvaged Memory as Chip Prices Reportedly Rise by Up to RMB 500 per Unit

Rising memory prices and tightening supply are reportedly pushing some Chinese smartphone makers to turn to salvaged chips. According to TechNews, some brands are said to be sourcing memory chips recovered from discarded phones through traders in Shenzhen’s Huaqiangbei electronics market, potentially including chips from used iPhones.

Sources say memory procurement costs have surged, with some chips reportedly costing up to RMB 500 more per unit. The Shenzhen local government is also rumored to be offering smartphone brands subsidies of around RMB 300 per unit, leaving manufacturers to absorb roughly RMB 200 in additional costs. Unable to fully pass on these increases to consumers, some brands are reportedly cutting production and sales volumes to limit losses.

However, TechNews notes that the reported price increases, subsidies, and use of salvaged chips by smartphone brands have yet to be confirmed by Chinese authorities or the companies involved. The report adds that such chips are largely limited to ultra-low-cost, unbranded smartphones and are unlikely to enter flagship supply chains.

The cost pressure extends across the smartphone market. According to TrendForce, AI server demand continues to squeeze DRAM supply, with shortages and price increases expected to persist into 2027. To manage rising costs, entry-level smartphone makers may turn to salvaged or lower-specification components to keep their product lines viable.

Rising Memory Prices Revive China’s Used-Phone Chip Recycling Trade

This growing interest in salvaged components comes as Huaqiangbei’s used-phone dismantling business sees renewed activity. According to an April investigation by China’s Caijing, memory shortages prompted recyclers to buy discarded smartphones and extract memory chips from their motherboards. The chips are then cleaned, stripped of residual solder, refurbished, and repackaged for resale in the electronics components market.

Caijing reported that a Shandong recycler purchased around 1,000 discarded phones in March, dismantling more than 600 for potential chip resale. Rising memory prices also boosted the value of older, low-end phones once considered nearly worthless, with some nonfunctional devices reportedly fetching more than RMB 100 each. Meanwhile, TechNews points out that Caijing’s investigation found some recyclers preferred Android phones from OPPO, vivo, and Huawei. However, sources told TechNews that Huaqiangbei traders primarily purchased used iPhones.

Memory Shortages Fuel Salvaged Chip Trade, but Risks Remain

Despite renewed interest, the market for salvaged chips faces significant constraints. A September investigation by STAR Market Daily found that refurbished chips can serve lower-end applications, including automotive accessories, IoT devices, and overseas refurbished phones. However, industry analysts cited by STAR Market Daily cautioned that salvaged chips face yield losses and compatibility risks, while recycling premiums could quickly disappear if major chipmakers adjust production.

The broader smartphone market remains under pressure. TrendForce projected that global smartphone production would fall 14% year over year to approximately 1.07 billion units in 2026. Although the forecast was revised upward due to earlier-than-expected purchases and brands restoring some production, TrendForce cautioned that rising memory costs could put further pressure on the market in 2027.

Read more

• Early Purchases Lift 2026 Smartphone Production Above Expectations; Full-Year Forecast Raised to 1.07 Billion Units, Says TrendForce
• [News] Samsung Sees HBM Taking Nearly 30% of Industry DRAM Capacity in 2027, Up From 20% Currently

(Photo credit: Samsung)