The simple question is what happens with rejects from production?
And the reason for asking is that there were recently two topics where a photo of a board showed a CH340 but was identified by Windows as a FTDI chip.
30-plus years ago I did work in the testing industry. I know that dies on wafers were marked so they would not be packaged in ICs. ICs were tested and the customer got the rejected ICs back in separate tubes so they would not use those in production of PCBs. In both cases I do not know what the customer did with the rejects (it might very well have been the dustbin).
In the IC industry, production or "out-of-spec" chips rejects are sometimes sold to specialized companies or brokers. These companies would repackage the chips to be sold as "gray market" components.
Sometimes it's fine, for example ICs with minor defects that don't meet high-performance specifications might still function for less critical applications, like in consumer electronics instead of aerospace or medical devices.
But you also have some brokers purchasing defective or surplus ICs, they would relabel them and resell them to second tier "budget-conscious" manufacturers and this sometimes lead to counterfeit components entering supply chains...
In the 70s I built my first computers with such rejected parts. The early simple TTL gates usually had defective bonds, I simply clipped the defunct pins. Later on package problems led to high quality bargain caused by wrong labels, misplaced pin 1 markers, cases top-down or pins bent up instead of down.
Last known professional recycling came with e.g. ZX Spectrum memory chips of odd size (48KB...) if a bad wafer spot made half or quarter of a memory chip unreliable.