October 23, 2026, 6:03 am | Read time: 3 minutes
The AI boom appears to have unexpected consequences for the smartphone market. Due to a shortage of memory chips, Chinese manufacturers are increasingly turning to used components for budget phones.
AI Data Centers Worsen the Shortage
Memory (RAM) for smartphones is becoming scarcer and therefore more expensive. One reason is the growing demand for hardware for AI data centers. Major memory producers like Samsung and SK Hynix are increasingly focusing on the lucrative high-performance memory for AI systems. As a result, there is less capacity available for producing cheaper memory used in smartphones.
This drives up costs: According to WCCFTECH, RAM now accounts for 30 to 40 percent of the total component costs of a smartphone. Previously, it was only 10 to 15 percent. This could lead to additional costs of approximately 45 euros per device. As a result, manufacturers of budget smartphones, in particular, must look for alternatives.
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Old Memory Chips Find Their Way into New Smartphones
One solution appears to be the recycling of old memory modules. According to Counterpoint Research, Chinese manufacturers are increasingly using used chips. Even DDR4 memory from decommissioned U.S. data centers is being reused. A key hub for this is Huaqiangbei in Shenzhen, where chips are removed from old or defective boards, cleaned, and tested.
Subsequently, the components can be soldered onto new boards. Some manufacturers have reportedly raised their previously reduced production targets as a result. However, chips also age. After years of use, their reliability can decrease, increasing the risk of memory errors, system crashes, and other malfunctions. Some of the recycled chips are said to have been in use for five to six years.
What Buyers Should Consider Now
Current findings suggest that this development mainly affects low-cost entry-level devices, not high-priced flagship models. It remains unclear which smartphone brands specifically use recycled RAM. Xiaomi, Huawei, Honor, Oppo, or Vivo are not explicitly mentioned in the available reports as users of such components.
Also of interest: Memory crisis could drive manufacturers to bankruptcy
Another open question is whether manufacturers inform their customers about used chips. According to Counterpoint, memory modules that are five to six years old could still function for a similar length of time, albeit with a higher error rate. Therefore, especially with very cheap Chinese imports, a certified refurbished device from a reputable dealer could be an alternative. As long as the memory industry focuses on lucrative AI hardware, the pressure on the smartphone market is likely to persist.