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 Post subject: The motherboard game.
PostPosted: Tue Aug 02, 2022 10:53 am 
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Buying and selling e-scrap is much like a game of chess, and the grades of material represent the game pieces. Each grade of material has their own unique characteristics that define what they are and their overall value in that game.

In a perfect world, every single single circuit board made would be purchased for its absolute content value. That old Epson MX-80 printer circuit board in your bucket...$0.17. That telecom board from an old Bell Systems ESS1 switch laying on the workbench? $7.21. (these prices are imaginary for dramatic effect).

Unfortunately it does not work that way. It would be impossible to price out every single circuit board that we touch. So instead we must rely on assumptions and approximations based on some simple guidelines and our overall experience using a grading scale.

For example, let's take a quick look at Peripheral grade material. As of this post we are paying $2.50 per pound for higher grade peripheral boards. This is our widest raging grade. Of the circuit boards that come our way, there are many times more peripheral grade boards than any other grade. It covers an extremely large segment of the circuit board spectrum.

Considering the vast diversity of boards that make up the Peripheral High grade one must accept that some of those boards are going to be worth less than $2.50 per pound and others will be worth more. It would be interesting at best (I say in jest) if the electronics industry got together and set a standard as to how much gold, silver, etc. they used for every board ever manufactured, but of course that is not practical or feasible. So instead we have the largest variety of circuit boards that make up a grade which we must value based on a running consistent average of the total return of that entire grade over time. (read that again) Some better and some worse but the average return remains fairly steady so long as we are grading and buying it correctly.

The same can be said for our motherboard grades as well. Well. Kind of.

A little history. Back in mid to late 2000's, there were 3 grades of circuit boards for the most part. Low, Mid and High grade. Easy enough. The high grade is where you would throw your telecom and your motherboard with ram etc. One flat rate for all of your better boards. It was good money at the time as the across the board averages that I mentioned above were fairly high. Easy enough I guess, tear it down, throw it all in one box and cash it out. Done.

Of course it became immediately obvious that the RAM was probably better than the mix of boards that we were getting paid on, so those got pulled and sold separately.

Same with the gold capped telecom boards, they began to pull those as well in hopes of finding better money else where. Is that a cpu still on the motherboard? Yeah, no more cpus in the box either. Pull it!

So what starts happening is the averages begin to drop. High tier buyers start being forced (by economics) to pull and pay less for the lower value material out of their high grade mixes in order to offset the fact that the higher paying boards were pulled by the previous seller thus lowering the running averages.

This tug-o-war game continued on for years with each round of grade changes being designed to balance out the continued value segregation of the material until things finally settled down for the past 4-5 years.

Except with the motherboards. The clandestine motherboard war has been fierce. I mentioned the game of chess in the opening of this post where the material represents the pieces. When it comes to motherboards, it is like playing chess on a whack-a-mole table. Buyers come and go, each having for their own unique niche' in the motherboard business that they use to gain a competitive edge, whether it be for salvage or scrap. This has allowed us to push back on the processors a bit by offering a slightly higher price for certain style of motherboards above what our processors will pay. But they come and they go. These buyers are not paying for the raw materials involved which adds a level of instability to any long term agreements. The amount of gold in that Small Socket Green motherboard did not change, but the demand for that board above and beyond the value of that gold content can and will.

What this has allowed us to do (until now) is spare you, the seller, from the vast disparity in precious value content between the various styles of boards. We kept our motherboard grades as limited in number as we could and instead we set our prices based off of the averages on our returns from all of our vendors combined. Some motherboards are just more desirable to certain buyers and that includes the higher gold content ones as well as certain non-gold value boards.

Going back to the historical example I gave above, the eventual result of cherry picking material is a lower average return across the board. As this business matures, and buyers/sellers become more savvy to maximizing their returns by exercising techniques like the aforementioned, the market as a whole must and WILL adapt. Large end-tier wholesale processors realize that by the time the material reaches their point, many of the higher average motherboards have been pulled out, often leaving them with nothing but an entire semi truck of the least valuable motherboards out there, precious metal wise.

But it is not just the increased competition for the better material that is creating these changes, it is the economy as a whole. With RECORD inflation these processors are scrambling to make up the difference. Pair that with a dropping gold value, they have been forced to crack down where ever necessary.

They cannot make more gold appear in a board yet their costs are increasing at a sky rocketing pace to process that same board. Unless the price of gold begins to track inflation and rise at a record paces, we are going to see further segregation in the future. Processors make up these deficits by paying less per pound for the material and by cleaning up the buying stream by once again segregating the lower returning boards out to yet another lesser paying category, hence the AMD motherboard grade.

Rest assured we are going to continue to compete and maintain an edge. The scrap business is extremely cyclical. It represents a true form of supply and demand mixed with commodity trading, both of which routinely experience wide swings. But the reality is that as with any business, you must be willing to be flexible and adaptive. This is a completely different game than the one I first described above, yet we are still playing.


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