South Korea's used smartphone market is experiencing rapid growth, driven by escalating memory semiconductor prices that are pushing up the cost of new phones. In the first half of this year, domestic used phone purchases in South Korea reached 2,925,067 units, with a transaction value nearing 1 trillion won (approximately $718.9 million). Person-to-person used phone transactions also saw an increase, growing from 6.2 million units in 2023 to 6.81 million units last year. TrendForce estimates that memory components will constitute about 40% of the bill-of-materials cost for iPhones by the first half of next year. Major manufacturers like Apple and Samsung Electronics are actively participating in the refurbished market, further expanding this segment. South Korea's semiconductor exports from September 1st to 20th showed a significant year-over-year increase of 259.4%, reaching $34.128 billion.
As memory semiconductor prices, a critical component in smartphones, continue to rise in tandem with new product launch prices, consumers are increasingly turning to the used phone market. In the first half of this year alone, nearly 3 million used phones were circulated in South Korea, with the purchase transaction value approaching 1 trillion won.
According to UPM, a B2B transaction management system for used phones, total used phone purchases in the first half of this year reached 2,925,067 units. The total purchase value for the same period was 995,128,920,000 won (approximately $719.0 million), bringing the market close to the 1 trillion won milestone. UPM, an enterprise resource planning (ERP) system used by approximately 80% of used phone businesses nationwide, is considered a reliable indicator of South Korea's used phone distribution volume.
Industry experts anticipate that this year's used phone purchase value is likely to set an all-time record. If current price trends persist through the second half of the year, annual figures could potentially exceed 2 trillion won (approximately $1.4 billion) for the first time.
A report released in June by the Korea Information Society Development Institute (KISDI) also indicated a consistent annual expansion in South Korea's person-to-person used phone transaction volume. Personal used phone transactions totaled 6.2 million units in 2023, 6.35 million units in 2024, and 6.81 million units last year, representing an increase of over 600,000 units in two years.
This trend is global. Market research firm International Data Corporation (IDC) projects that worldwide shipments of used and refurbished smartphones will grow from 253.4 million units in 2021 to 413.3 million units this year, a growth of over 63% in four years.
Memory costs are the key driver of price surges
The surge in new product prices is primarily attributed to the sharp increase in memory semiconductor prices. The booming demand for AI servers and data centers has led to a concentration of production capacity on high-bandwidth memory (HBM), consequently constraining the supply of DRAM and NAND flash used in smartphones. This imbalance between unchanged demand and shrinking supply has driven prices upward.
Market research firm TrendForce estimates that memory's share of iPhone bill-of-materials (BOM) costs will rise to approximately 40% by the first half of next year, surpassing both the application processor (AP) and display—components traditionally considered the main cost drivers. Counterpoint Research predicts that in the third quarter of this year, the system-on-chip (SoC), including the AP, will account for 24% of a smartphone's BOM, and displays will account for 7%. If memory's share reaches 40%, it would exceed the combined share of AP and display.
Indeed, the recently unveiled iPhone 18 Pro series from Apple experienced significant price increases. The top-tier model exceeded NT$90,000 in Taiwan dollar terms, equivalent to roughly 3.9 million won (approximately $2,800). This is a stark contrast to just a few years ago when premium smartphones priced above 1 million won (approximately $720) were considered expensive, illustrating the dramatic rise in prices.
South Korea's export statistics further confirm the strength of the memory market. The Korea Customs Service reported that exports from September 1st to 20th reached $71.409 billion, a 78.3% increase from the same period last year, setting an all-time record for this period. Semiconductor exports alone amounted to $34.128 billion, a remarkable 259.4% surge, accounting for nearly half of all exports. The trade balance for the same period showed a surplus of $22.966 billion.
Manufacturers enter the used and refurbished market directly
As demand grows, smartphone manufacturers and telecom carriers are increasingly entering the used and refurbished device business. Refurbished products are items returned by consumers or display units that are repaired, inspected, repackaged, and resold.
Apple operates its Apple Upgrade leasing program and certified refurbished sales business, while South Korea's Samsung Electronics (005930.KS) sells its own used devices directly through the Galaxy Certified Renewed program. Market research firm Omdia noted, "Samsung, Apple, and major carriers are revitalizing the market through trade-ins, refurbished product sales, and resale." They added, "These programs include parts replacement, warranties, and discounted pricing, which will expose more consumers to refurbished smartphones."
From the manufacturers' perspective, the used market presents not only a challenge but also a new revenue stream. Devices acquired through trade-in programs can be refurbished and resold for profit, while also encouraging users to remain within their respective ecosystems.
An industry insider commented, "The biggest barrier to purchasing a new smartphone is price. With component costs like semiconductors rising sharply, device prices have increased accordingly, driving consumers toward the used market."
A boon for memory suppliers
While the expansion of the used phone market offers relief to consumers, it benefits memory semiconductor suppliers significantly. Samsung Electronics and South Korea's SK Hynix (000660.KS), dominant players in the global memory market, are poised to be the biggest beneficiaries of the growing AI demand and recovering memory prices.
Lai Yu-ting, a fund manager at Taiwan's UOB Asset Management, explained that the rapidly increasing demand for HBM from AI servers and data centers has led to a reallocation of production capacity towards high-value memory, resulting in a tighter supply of DRAM and NAND flash for consumer electronics like smartphones. The subsequent rise in memory prices has contributed to increased phone costs, a key factor behind the price hike for the iPhone 18 series, according to the analysis.
He assessed that Samsung Electronics and SK Hynix are benefiting from favorable product mix and operating conditions due to AI demand and memory price recovery. Given that South Korea's latest export indicators still show strong semiconductor export growth, memory prices, HBM shipment volumes, and the earnings of these two major companies are expected to be key market watch points moving forward.
The structural growth of the used phone market is likely to continue in the foreseeable future. Memory prices are not expected to stabilize in the short term, and as long as the AI investment cycle persists, pressure to increase new product prices will remain. As consumer demand for accessing the latest technology without incurring high costs grows, the industry consensus is that the used and refurbished market will establish itself as a pillar of the smartphone industry.
