AI memory crunch pushes Chinese phone brands to salvage chips from scrapped handsets
AI server demand is crowding out memory capacity and driving prices sharply higher, and some Chinese smartphone brands have reportedly turned to Shenzhen's Huaqiangbei market to buy memory chips stripped from used phones — possibly including parts taken from old iPhones. Sources said some chips now cost about 500 yuan more each, with a reported local subsidy of roughly 300 yuan still leaving brands to absorb about 200 yuan per unit; the price increases, the subsidy and which brands use salvaged chips have not been confirmed by authorities or the companies. TrendForce said the imbalance caused by AI servers squeezing memory supply and the resulting price rise could last into 2027, noting that contract prices for an 8GB DRAM plus 256GB NAND Flash configuration rose nearly 200% year over year in the first quarter of 2026, with memory's share of smartphone bill-of-materials rising from about 10-15% to 30-40%, and it forecast global smartphone production in 2026 falling 10% to about 1.135 billion units.
It shows how AI infrastructure demand is passing cost pressure down the supply chain to consumer devices.