Beijing, 21 October 2026: The encroachment and growing currency of Artificial Intelligence has created a major crisis in the global tech world. The huge demand from AI data centers has created a serious shortage of memory chips around the world. To avoid this inflation and shortage, Chinese smartphone manufacturers have discovered a unique 'jugaad', which can prove to be a big headache for the consumers in the future. According to reports, Chinese companies are now slowly using old memory chips extracted from junk phones and computers in their new smartphones.
According to a report by market research firm Counterpoint Research, Chinese smartphone makers are mainly using recycled DRAM chips in their entry-level (cheap) models. Not only this, some companies are planning to depend completely on second-hand supply for their cheap phones. Instead of destroying 5 to 6 year old chips, these companies are recycling them and fitting them in new phones and trying to make them work for the next 5 to 6 years.
-
How are chips recycled?
Memory chips have to be taken out very carefully from the motherboards of phones and computers that have become junk. A huge black/grey market for these old chips has developed in the country's largest electronics market 'Huaqiangbei' located in Shenzhen, China. In this, the extracted chips are cleaned, the solder residues are removed and they are refurbished and sold at only 40 to 60 percent of the cost of new spare parts. These chips are being used not only in cheap smartphones, but also in other electronic devices and car gadgets.
-
What is the risk to customers by using old chips?
The biggest risk behind this 'Jugaad' is on the reliability of the device. Researchers at the University of Florida have discovered that the older the chip, the less its ability to save data. In addition, the heat generated in the process of removing a chip from one circuit board and fitting it on another makes the internal parts of the chip very weak. If a smartphone has such a damaged or worn out chip, the phone may hang frequently, turn off suddenly without any warning, or even go 'dead' permanently.
Major chip makers like Samsung and SK Hynix are currently focused on creating high-bandwidth memory for AI data centers. Due to which, there is a huge shortage of low-power DRAM like LPDDR4 and LPDDR5 in smartphones and their prices have increased three times compared to last year.
Chinese companies like Xiaomi, Oppo and Vivo, which focus on cheap phones, have suffered the biggest blow due to this. According to Counterpoint Research, Xiaomi's share in the global market has declined to 12 percent, while the shipments of Oppo and Vivo have also declined by more than 20 percent. So that the burden of rising prices does not have to be passed on to the customers, these companies are now resorting to cheap and old chips. This chip crisis is likely to continue till next year. If this happens, the demand for recycled RAM will still increase. But it is impossible to get exact information about how long and how the old chip was used, due to which no guarantee of its quality and longevity can be given.