Gold used in electronics gained 6% y-o-y to 71.3t in Q4. Despite some seasonal pressure on the LED sector, the other three key sub-sectors achieved decent growth. The wireless sector was the indisputable outperformer thanks to increasing numbers of sensors embedded in smartphones, and the high level of wafer output among wireless chip manufacturers. Record levels of memory chip demand underpinned growth in gold bonding wire, while gold coatings used in PCBs also experienced high demand.
The wireless sector benefited from a surge in demand for 3D sensors; most notably those powering new-generation smartphone features such as 3D video, virtual reality (VR), augmented reality (AR) and iris- and gesture-recognition. The emerging 5G network infrastructure market generated additional demand. Taiwan-based Win Semiconductors, for example, saw its 2017 wafer output increase 70%. Overall, gold demand in wireless applications was estimated to have grown by as much as 20 to 30% y-o-y in Q4.
Gold bonding wire demand continued to be supported by the combination of a severe supply shortage of, and an unprecedented demand for, memory chips in 2017. Looking forward, DRAM and NAND price windfalls will encourage major chip companies, such as Samsung, Hynix and Micron, to increase production. This may translate to additional demand for gold if overcapacity in the market is avoided.
Demand from the LED sector lagged due to its traditional seasonal dip. Q4 was 1-3% lower y-o-y. The outlook, though, is broadly positive with LED manufacturers planning to increase production capacity of high margin units. Many of these LEDs will be used in the automotive sector, a key growth industry for electronic components. We expect this will be supportive for gold demand.
Taiwan and South Korea topped the league table of gold demand in the electronics sector, with y-o-y growth of 17% and 16% respectively in Q4.