First, people don't know that bicycle components are replaceable and fairly standardized. Second, replacing a few worn out parts with decent quality replacements costs more than a new bike-shaped object.
It depends on the country. Here in Argentina you never send a bike to the scrap yard. First you try to fix it yourself, then go to the local bike shop that is 5 blocks (1/2 mile) away. When it's too old you give it to your nephew. And when it's really old or has a massive problem it may be cannibalized and the remainders send to a scrap yard.
I guess experiences vary: I’ve never heard that – in fact, people who bought cheap Walmart bikes were surprised when they learned that a part was non-standard and hard to replace.
My experience with the cheap bikes is that literally every component is garbage, and if one fails, it's not long before something else does.
The frames can sometimes be fairly durable, but I've had plenty of mount points shear off and stuff like that, even if the frame doesn't outright fail.
The other problem is that the entire design is often just kitsch 'fashion' and 'disposable', and even if you could fix it/upcycle it economically, it's so heavily 'styled' as to make it undesirable.