How Microsoft’s Circular Supply Chain Hit 90.9% Reuse

Microsoft may be known for its software and cloud dominance, but what it’s doing behind the scenes with its supply chains is drawing attention for all the right reasons.

In 2024, the company hit a 90.9% reuse and recycling rate for its servers and data centre components - a full year ahead of its own target. That means Microsoft is not only exceeding its sustainability goals but doing so by embedding circularity into the heart of its infrastructure operations.

This result stems from a broader push to transform how tech handles end-of-life hardware.

According to Melanie Nakagawa, Microsoft’s Chief Sustainability Officer: "This milestone reflects our dedication and is just one piece of reaching our goal of zero waste by 2030."

With circularity increasingly becoming a necessity for sustainable growth, Microsoft’s work with suppliers and recycling partners shows how aligning infrastructure with environmental goals can reshape entire supply chains.

Circular Centres reshaping the server lifecycle

At the centre of Microsoft’s success is its growing network of Circular Centres, dedicated facilities that process retired data centre hardware and give components a second life.

Instead of sending end-of-life servers to landfill or overseas processors, these centres break down and recover parts for internal reuse, resale or donation to skills training programmes.

The initiative started in Amsterdam in 2020 and has since expanded across the US, Ireland and Singapore. New sites are in development in Cardiff, New South Wales and Texas. These centres are built to do more than recycle — they support local economies, connect with regional logistics and recycling providers, and aim to close the loop on critical materials.

Rani Borkar, Corporate Vice President of Azure Hardware Systems and Infrastructure, explains how these efforts contribute to the broader strategy: "This recent milestone, driven by a culture of innovation and cross-functional collaboration, reflects the growing momentum to integrate zero waste and circularity practices across the technology industry."

The process is yielding strong results. In 2024 alone, Microsoft reused more than 3.2 million components through these channels - a 30% boost in value recovery through the Circular Centre programme.

As Rani puts it: "By redesigning systems to reduce waste, then reusing and recovering materials wherever possible, we’re saving costs, gaining efficiency and discovering new opportunities for hardware and infrastructure components."

This strategy means that Microsoft isn’t just managing waste — it’s creating value, reducing reliance on external supply chains, and setting an example for how infrastructure teams can rethink hardware lifecycle management.

Recovery, resilience and rare earths

A crucial part of the strategy involves rare earth elements (REEs) - the critical metals found in electronics, clean energy systems and countless tech products.

Traditionally, mining these materials comes with high environmental and ethical costs. Microsoft is working with partners such as Western Digital, Critical Materials Recycling and PedalPoint Recycling to change that equation.

Through a low-emission, acid-free process, Microsoft has processed 50,000 pounds of hard disk drives, recovering up to 90% of valuable materials like neodymium, praseodymium, dysprosium, gold and copper. These elements are then reused in other components, helping to conserve resources and lower emissions.

"Through material recovery — extracting valuable components from discarded products and putting them to work in new ways, like memory chips and motherboards — we’re not just reducing waste, we’re conserving resources and lowering emissions," adds Melanie.

This approach reduces the need for new mining and cuts emissions by up to 95% compared to traditional methods. Importantly, keeping the process local means lower transport emissions and a more resilient supply chain — something increasingly vital given the industry’s reliance on imported rare earths.

With global demand for rare earths growing at 9% per year and the market forecast to reach US$16.3bn by 2030, Microsoft’s strategy proves that circular solutions are not only achievable but essential.

As Melanie concludes: "Scaling these practices across all our operations is our next step and I’m inspired by the support of our many partners as we continue transforming our approach to waste management.

"Together, we’re creating lasting impact and shaping a brighter, more sustainable future."

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