Gold Demand Trends Q1 2018

Published 3rd May 2018

Technology

Sixth quarter of growth in gold used in technology: up 4% to 82t.

  • Electronics demand grew 5% y-o-y, due to healthy demand in the wireless and memory sectors
  • Bonding wire saw uninterrupted growth, due to expansion in cloud storage and graphic cards among others
  • Outlook for the healthy wireless sector remains rosy as 5G telecom network upgrades in progress.
Tonnes Q1'17 Q1'18 YoY
Technology 78.9 82.1 4%
Electronics 62.4 65.3 5%
Other Industrial 12.2 12.6 3%
Dentistry 4.3 4.1 -4%

Electronics

Gold used in electronics grew 5% y-o-y to 65.3t in Q1. This was driven by sustained demand for gold bonding wire, as well as for gold in the wireless and Printed Circuit Board (PCB) sectors. However, recent technology and pricing changes in the LED industry have softened demand, taking the shine off an otherwise strong quarter.

Gold used in bonding wire increased by around 5% as memory chip makers embarked on capacity expansion. At least four chip makers opened new factories in China and all are expected to reach commercial operation by the second half of 2018. These additional outputs of DRAM and NAND memory chips will fulfil a strong appetite for cloud storage and computer graphic cards used in cryptocurrency mining infrastructure. 

Strong demand for memory chips was the main contributor to a fourth consecutive quarter of record profits for Samsung Electronics. The South Korean tech giant expects that ’demand for server and mobile DRAM…[will] be robust and orders for high-density storage chips will grow’.

In the wireless sector, gold demand was estimated to have increased between 20 and 30% y-o-y. The inclusion of vertical-cavity service-emitting lasers (VCSEL) for 3D sensors and gesture recognition in smartphones took centre stage.1 An additional boost is expected from 5G network upgrades currently underway within the telecommunications industry. Verizon plans to roll out 5G to five cities in the US this year. And China, Japan, Taiwan and South Korea have announced similar plans.

Demand for gold from the LED sector was relatively weak. Falling prices of commonly-used blue LEDs accelerated the apparent shift to infrared LED, particularly in the automotive sector. As well as commanding higher margins, these types of LED require less gold within their packaging technology. Additionally, new mini-LED products are expected to come on line later in 2018, although the impact of this shift on gold usage is uncertain.

Growth in industrial fabrication was widely present across geographical locations. South Korea led the way: volume grew 10% to 6.7t. China, the US and Japan were healthy as well, rising 8%, 3% and 3% respectively.

Footnotes:
  1. 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.

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