Chip crisis increases demand for refurbished devices

The electrical industry is suffering from a shortage of chips and other materials. Many manufacturers, for example of televisions, laptops or smartphones, are struggling with supply bottlenecks. This plays into the hands of suppliers of refurbished electrical goods.

Smartphones in particular are products that are all too quickly sidelined, even though they are actually still usable and good. People are too quick to buy the latest devices and give up the old ones. In the worst case, they end up in a drawer; it’s better if they’re given as Refurbished products are given a second life. Because if the display is scratched or the battery quickly dies, you don’t have to buy a new smartphone right away. Often it is enough to replace worn-out parts and thus give the device an extended life.

Suppliers of refurbished devices have seen this for a long time, but they are even happier now. The current shortage of materials, for example chips, is causing production difficulties and delivery bottlenecks for many manufacturers of smartphones, tablets, etc. “Does it really always have to be the latest product? Or can’t it also be a product that is as good as new?” asks Kilian Kaminski, co-founder of the repair platform Refurbed.

Refurbished devices conserve limited resources

In the entrepreneur’s view, the consumer behavior of many customers has changed. “The interest in refurbished products has increased enormously,” Kaminski says. The chip shortage and general raw material shortages are probably also contributing to more people looking at consuming electronics, he says.

“Buying less new and relying more on refurbished products can help make better use of limited resources,” agrees Martin Hügli, head of Germany at Back Market, an online platform for selling refurbished electronic devices. After all, refurbished providers often only replace broken parts of used electrical devices and then offer them for sale again. As a result, companies rarely need large quantities of new materials or chips, explains Augustin Becquet, president of the European Refurbishment Association (EUREFAS). The industry is now benefiting from this, he adds.

For example, Becquet says, the association has noticed a great demand for refurbished, older iPhone models. This could be due, for example, to the shortage of materials that led to production and delivery problems with the most recently released iPhone 13. Instead of buying the latest device, customers have to switch to older, already used models. However, the association does not have any figures on this.

Delivery problems with many new smartphones

“Current sales forecasts for the new iPhone assume that fewer units will be sold due to the chip shortage,” Hügli agrees. Indeed, Apple CEO Tim Cook reported in October that supply chain bottlenecks and Corona failures in production were depressing group sales by six billion dollars. Distributors of refurbished Refurbished goods, on the other hand, often work with older models where enough components are available, explains the back-market boss. “We don’t run out of stock because of that.”

The shortages of new goods may additionally motivate many already Buying refurbished devices is not a good idea, according to Steffen Kahnt, managing director of the German Trade Association for Technology (Handelsverband Technik). However, the association sees refurbished as a niche. Although refurbished devices have long been a relevant alternative for price- and environmentally-conscious consumers, the market is still “very small,” he says.

But the business model has other advantages besides the material aspect, says Niklas Meyer-Breitkreutz of the digital association Bitkom “Customers also save money and even get a warranty back on the devices.” In general, therefore, demand for refurbished electrical appliances has risen in recent years because of “Germans’ environmental awareness,” Meyer-Breitkreutz says. He advocates using appliances for longer, thus minimizing their carbon footprint. After all, there are around 206 million cell phones and smartphones slumbering in the drawers of German citizens that could be refurbished and reused, according to a survey commissioned by Bitkom.

Apple and Samsung take back old devices.

Manufacturers such as Apple and Samsung already offer to take the old device in trade when buying new ones. They are refurbished and sold as Refurbished devices are resold or recycled in order to recover raw materials. According to Apple, 10.4 million devices were refurbished worldwide last year and 39,000 tons of electronic waste were recycled.

Should the shortage of raw materials continue for a longer period of time and have an impact on the prices of electronic devices, Marion Lichti from IT retailer AfB sees this as an advantage for the industry: “Good refurbished used goods are attractively priced and all the more attractive the more the prices of new devices rise.”

When buying However, prospective buyers of refurbished smartphones should not only pay attention to the hardware, but also to the software. It is desirable that a current version of the operating system can run on it. Apple’s latest operating system is iOS 15, which requires an iPhone 6s, iPhone 6S Plus, iPhone SE (1st generation) or newer. The situation with Android is confusing because of the many manufacturers. The current version 12 is sometimes not even installed on new devices. But here, too, the newer the Android version, the better.