Gold Demand Trends Full Year 2017

Published 6th February 2018

Technology

Demand for gold in the technology sector saw an overall gain of 3% to 332.8t in 2017, the first y-o-y increase since 2010. Q4 was a particularly strong quarter at 88.2t, the highest level of demand since Q4 2014

  • Electronics demand was 4% higher in 2017, with recovery persistent across all four quarters 
  • Three key components of electronics – wireless chips, Printed Circuit Boards (PCBs) and gold bolding wire – drove growth
  • Only the dental sector registered lower demand, continuing the trend of recent years
Tonnes 2016 2017 YoY
Technology 323.4 332.8 3%
Electronics 255.6 265.3 4%
Other Industrial 49.8 50.6 2%
Dentistry 18.0 16.8 -6%

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. 

Volume of gold used in technology increased for the first time in seven years

Source: Metals Focus; GFMS, Thomson Reuters; World Gold Council

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