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The problem with cannibalizing existing parts is the following scenario: Chip X exists in Product A, which costs $10. Without Chip X, Product B cannot be sold.
by totalZero 5y ago
The problem with cannibalizing existing parts is the following scenario:
Chip X exists in Product A, which costs $10. Without Chip X, Product B cannot be sold. Chip X is suffering from a shortage. The gross margin on Product B is $1000. As a consequence, the manufacturer of Product B buys a ton of Product A on Alibaba in order to cannibalize it and harvest Chip X. Now the gross margin on Product B is $990 (not so bad), but Product A is nowhere to be found.
In other words, the shortage moves to the cheapest available finished product that has Chip X in it, until marginal profit reaches 0.
The consequence is obvious. Product C, which cannot be manufactured without Product A, eventually becomes unavailable. And so forth.
This is particularly gruesome in the semiconductor sector because supply chains for finished goods are so long.
- helsinkiandrew 5y agoGood point, but I was referring to recycling discarded/end of life products rather than cannibalising/harvesting from unused hardware. Obviously this would only be viable in low end devices (tooth brushes rather than graphics cards). But there is already an industry based around desoldering old parts and selling them as 'fake' new ones - if this was done in scale with the parts tested and a company could order 20K there would be a market.
- intricatedetail 5y agoYou cannot stick used chips in a new product, no?
- helsinkiandrew 5y agoWhy not - as long as the chips are tested and product works and is guaranteed - this would actually be a selling point to many people.
- intricatedetail 5y agoIsn't it like selling a "new" car with used parts?
- helsinkiandrew 5y agoI think the marketing friendly term is "Recycled". About 25% of the steel and other metals in todays cars will have been used before and we'll probably get to a point where batteries are heavily recycled in electric car too.
- rasz 5y agoYou just described current Macbook charging chip situation. The only place to find Intersil isl9240 proprietary charging chip, the one Apple forbade Intersil/Renesas to sell to anybody but them, is in smart battery case for the iPhone XR (A2121). https://twitter.com/hashtag/isl9240 https://twitter.com/hashtag/isl9240 Every time you need a $3 charger chip (real price of isl9241, one at the end instead of zero) to fix a $3000 computer you have to buy a $130 apple gadget, desolder it, and throw that $130 apple garget including battery into garbage bin. $3000 laptop turned to paperweight due to ISL9240 unavailability. https://www.youtube.com/watch?v=HJ2jyo7pAmE https://www.youtube.com/watch?v=HJ2jyo7pAmE