Some Chinese phone makers are reportedly turning to memory chips recovered from discarded handsets as rising component costs squeeze the budget smartphone market.
According to TrendForce, citing Taiwanese publication TechNews, reports that traders in Shenzhen’s Huaqiangbei electronics market are supplying salvaged memory, potentially including chips extracted from used iPhones.
The reported use concerns mainly ultra-cheap, unbranded phones. Neither the manufacturers involved nor Chinese authorities have confirmed the claims, and the report considers flagship supply chains unlikely destinations.
The trade involves removing chips from old motherboards, cleaning them, stripping away residual solder and preparing them for resale. Yesterday’s dead handset could become tomorrow’s component supplier.
Earlier reporting by the Chinese publication Caijing documented recyclers buying discarded smartphones to recover their memory chips. Rising chip prices have made previously worthless devices worth dismantling.
Recovered chips bring their own problems, including losses during extraction and compatibility issues. The economics could change quickly if fresh supplies improve.
TrendForce says demand from AI servers continues to absorb DRAM manufacturing capacity, with shortages and rising prices expected to persist into 2027.
Phone manufacturers face higher production costs while customers resist paying more, leaving entry-level models particularly exposed. Some brands are adjusting prices and production volumes, while cheaper components offer another way to keep selling affordable handsets.
TrendForce forecasts global smartphone production will fall 14 per cent in 2026 to approximately 1.07 billion units.
