The third quarter saw a 4% y-o-y drop in the amount of gold used in the technology sector, to 82.2t. Whilst this was the fourth consecutive quarter of falling demand y-o-y, there are indications that some of the key electronics sectors are beginning to recover.
Electronics
Gold used in electronics fell 3% to 66.5t during Q3 due to a broad slowdown across the sector. The World Semiconductor Trade Statistics (WSTS) organisation published updated data during the quarter, which illustrates a stuttering market throughout 2019; the worldwide semiconductor market is forecast to decline 13% to US$406.6bn from 2018’s US$468.8bn record high. The WSTS predicts weakness across all geographical regions before an equally widespread recovery in 2020, with the market up 4.8 percent overall.
The LED sector experienced another weak quarter, with gold used in these applications down 8-10% y-o-y. Weakness in China’s automotive market contributed to the general market sluggishness. Mini-LED technology continued to gain a foothold, with some high-end notebooks now utilising this gold-free alternative. In parallel, the Chinese display market also saw continued weakness; inventories in this sector are high and this may temper growth in gold demand should the market recover in the coming quarters.
Printed Circuit Board (PCB) demand was stable during Q3, edging higher by 1-2%. Miniaturisation in the smart phone sector has stunted growth in the sector. Although increasing functionality has fuelled production growth, the requirement for high density packaging has driven miniaturisation, hence less gold per unit. However, it is also estimated that total PCB demand in 5G infrastructure will be four to five times greater than 4G’s. Combining this with the generally positive outlook for consumer electronics and artificial intelligence applications, the outlook for gold demand in the PCB sector remains positive.
The memory sector again registered a small decline, in the region of 3-5% y-o-y, mirroring Q1 and Q2. The ongoing challenges in the sector were again under the microscope as some of the world’s largest manufacturers announced reduction plans during the quarter; both Samsung and Micron have had a difficult 2019 although analysts believe the memory sector may have reached the bottom of the cycle. Indeed, a stabilising inventory, a recovery in PC/notebook shipments and rising demand in mobile devices seems to have steadied the ship and we expect to see a smaller decline in Q4.
Finally, the wireless sector surprised during Q3 with significant growth of 30-40% y-o-y. This has been fuelled by the rapid acceleration of 5G infrastructure deployment. Major manufacturers are in the process of implementing significant capacity increases; in 2020 Advanced Wireless Semiconductor will raise production by 30% and Win Semiconductor will implement a ~15% increase. Adding this to the already positive outlook for the automotive sector means strong demand is likely to continue into Q4 and 2020.The key eastern fabrication hubs of Mainland China and Hong Kong (SAR) and Japan registered falls in gold volumes in Q3, of 3.8% and 6.5% respectively. As seen during H1 19, the US bucked this trend with a small increase of 1.1%.
