China’s scrap‑phone gold rush crashes as chip‑price boom unwinds

Boom then bust: a market turned overnight

A six‑month surge in prices for discarded smartphones has evaporated into a rapid sell‑off, leaving warehouses piled with phones and many small recyclers sitting on heavy losses. It has been reported that daily processing on Shuma Recycle Net (数码回收网) climbed from about 200,000 units in September 2025 to nearly 1.5 million by mid‑March 2026, driven largely by a spike in demand for reusable chips. But from March 27 prices plunged: in five days overall secondary‑market prices dropped more than 30%, some models halved, and several Shenzhen Huqiangbei (华强北) dealers paused intake.

Small traders, big risks

The human toll is stark. Recyclers such as Zhang Lei and a dealer known as Haotian (浩天) turned brief windfalls into inventory headaches; it has been reported that some sellers paid millions to build stockpiles and then “封仓” (halted buying and selling) to avoid further losses. Popular models and parts — for example OPPO (OPPO/欧珀) A93 (8GB+256GB) — reportedly jumped from around ¥100 to ¥300 before collapsing again. Who is left holding the phones? The whole chain — front‑line collectors, Huqiangbei middlemen, dismantling factories and chip recyclers — is now strained by wildly fluctuating prices and cash‑flow squeeze.

Structural overload and data

Industry bodies and market players warn the surge exposed systemic weaknesses. According to the China Association of Circular Economy (中国循环经济协会) and other sources, China generates roughly 600–700 million discarded phones yearly, with only about 5% entering formal recycling channels; it has been reported that market capacity was simply insufficient to absorb the sudden inflow. Some recyclers told Tech Planet (Tech星球) they suffered four‑figure daily profits one day and six‑figure losses days later. Instances of rapid offloading at deep discounts — sometimes 15% below online benchmarks — have been reported as sellers seek immediate cash.

Why it happened, and what next?

The immediate cause was not sentimental: rising chip prices — a byproduct of global semiconductor tightness and trade frictions that have shifted parts sourcing and pricing — made salvaged phone chips suddenly lucrative for white‑label device makers in Southeast Asia, Africa and Latin America. It has been reported that higher prices for LPDDR chips pushed buyers from set‑top‑box parts to phone‑sourced components. But with inventories swollen, demand capped and middlemen pausing purchases, prices have reversed. Some recyclers expect a small rebound if large inventories are worked down; others warn the market needs structural upgrades — better sorting, certification and formal channels — before the next boom won’t end in a bust.