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.