Gold Demand Trends Q1 2017

Published 4th May 2017

Technology

Gold used by the technology sector grew 3% y-o-y, led by electronics, where gains in the wireless sector were partly offset by shrinkage in demand for LEDs.

  • Electronics demand rose by 4% on a yearly basis, but the usual seasonal Q4 –Q1 dip in demand was again observed with a 8% fall
  • Bonding wire was resilient, thanks to strong demand for memory chips, but continued progress in reducing wire diameters suggests the sector will decline throughout 2017
  • The growth of wireless charging in the smartphone sector should lead to increased demand for gold via the incorporation of additional sensors in handsets and charging stations
Tonnes Q1'16 Q1'17 YoY
Technology 76.4 78.5 3%
Electronics 59.9 62.1 4%
Other Industrial 11.9 12.1 1%
Dentistry 4.6 4.3 -5%

Overall demand for gold in technology was marginally firmer at 78.5t in Q1. This was slightly exaggerated, however, by Q1 2016 having been the lowest quarter on record (at 76.4t).

Electronics

Gold used in electronics grew 4% y-o-y to 62.1t in Q1. Growth came from the increasing wireless capabilities of smartphones, as well as robust demand for gold bonding wire. After a period of heightened activity in the second half of 2016, demand for gold bonding wire remained resilient in the first quarter of 2017. Strong demand for memory chips helped to offset the negative impact of 3D packaging1, which uses much lower volumes of bonding wire. Continued progress in reducing the diameter of bonding wire and advances in 3D packaging are, however, likely to dominate the sector over the coming quarters. 

Developments in the wireless sector were positive for gold usage, many of which were related to smartphone technology. Increasingly, smartphones are expected to offer wireless charging capability. This bodes well for demand for Printed Circuit Boards (PCBs), a component of wireless chargers. Additionally, a more high-end application of gold in smartphones involves the inclusion of vertical-cavity service-emitting lasers (VCSEL)2, which are used in gesture recognition, 3D sensors and 3D video applications. The iPhone 8 – expected to launch later this year – is rumoured to include this technology. These positive trends should offset the effect of the downturn in demand for smartphones.

The LED sector underperformed in Q1, hit by thrifting as miniaturisation continued to take hold. Growth in demand for infrared LED automobile lighting was not enough to offset the effect of the switch to Chip Scale Packaging (CSP)3 in the sector.

Several key Asian markets saw a y-o-y recovery in electronics demand: China grew around 7%, albeit from a low base, while Taiwan was steady, marginally firmer by around 1%. South Korea benefitted from the growth in PCB and memory production, turning in growth of around 3%.

Scientists worldwide continue to uncover new applications for gold that will lead to future sources of demand for the metal. US and UK researchers published a seminal paper in the leading journal Science describing insight into the working of an important gold catalyst currently in production in China.4 The research identified how gold particles within the catalyst drive the formation of an industrially important feedstock chemical. This insight promises to lead to the development of improved gold catalysts for the chemical industry.

Separately, researchers at Missouri University of Science and Technology have developed a new way of using gold to transform “flexible” or wearable technology. By growing thin layers of gold on a single crystal wafer of silicon, they discovered that they could preserve all the positive characteristics of silicon while adding the benefit of gold’s greater durability and flexibility.

Footnotes:
  1. 3D packaging increases the memory capacity of a flash chip in a smaller space, offering lower cost per gigabyte and greater durability.

  2. A vertical-cavity surface-emitting laser (VCSEL) is a type of semiconductor-based laser diode that emits a highly efficient optical beam vertically from its top surface. 

  3. Chip Scale Packaging (CSP) is suitable for use in automobile lighting as it can more easily withstand a vibrating environment. It also has the advantages of reduced size and, as it does not use gold, costs less. 

  4. Malta et al., Science  31 Mar 2017: Vol. 355, Issue 6332, pp. 1399-1403. DOI: 10.1126/science.aal3439