Overall, the volume of gold used in the technology sector fell to 79.3t during Q1, a 3% y-o-y decline. This was the second consecutive quarter of falling demand, a direct consequence of a weaker electronics sector and the ongoing trade dispute between China and the US.
Electronics
Gold used in electronics fell 4% to 62.9t during Q1, a consequence of a sector-wide slowdown. Apple, a bellwether for the sector, issued its first profit warning in 17 years during the quarter − a clear signal of weakening consumer electronics sales. And according to the World Semiconductor Trade Statistics organisation, the broader semiconductor market is expected to fall 3% in 2019, with modest growth returning in 2020.
The LED sector suffered another weak quarter, with gold used in these applications 5-8% lower y-o-y. Ongoing US-China trade friction continued to weigh heavily: more than 30 lighting applications are now subject to additional duties and this has led to some production shifting out of China. In the longer-term, gold demand within the LED sector is expected to come under further pressure as micro-LED packages begin to replace mini-LEDs, leading to lower gold bonding wire demand.
Gold demand in the Printed Circuit Board (PCB) sector fell by 5-7% y-o-y. Q1 is traditionally a slow season for PCBs, as manufacturers adjust production lines, but weak smartphone sales also had a direct impact on demand. Looking ahead, 5G-related applications are expected to support demand, particularly in the automotive sector, where vehicles offering 5G functions will need over 30 different PCB products.
Demand for gold in the wireless sector saw a very significant decline: in the region of 10-15% y-o-y. This was driven by slowing smartphone sales and ongoing delays to the installation of 5G infrastructure installations. However, we expect these delays to be resolved in the coming months, after which we would anticipate an increase in consumer electronics purchasing and an associated upturn in gold usage in the wireless sector.
The memory sector also continued to slow in Q1 with an average decline of 2-5% y-o-y. The smartphone slowdown continued to negatively impact demand, with many manufacturers lowering CAPEX investment in response. Technology migration remains a threat; for example, the increasingly widespread use of 96-layer Through-Silicon-Via (TSV) chip packages (which use much smaller amounts of gold wire than the current standard 64-layer packages) will further erode gold usage in these applications.
The key eastern fabrication hubs of China (Mainland China and Hong Kong (SAR) combined) and Japan registered falls in Q1 gold volumes of 6.7% and 5.4% respectively. The US bucked this trend, with a 3% increase.
Other industrial and dentistry
Dental demand again declined, falling 11% y-o-y to 3.6t with losses across all markets. Meanwhile, gold used in other industrial applications registered a small (3%) rise to 12.9t, helped by modest growth in demand for branded gold-plated accessories in Europe and costume jewellery in South East Asian markets.
In the healthcare space, a range of innovative gold-based nanotechnologies made progress towards market launch. Healthcare applications were boosted by the launch of a pilot facility in Europe designed to manufacture gold nanoparticle therapeutics for clinical testing. The lack of such a facility has been a considerable bottleneck for many years, so we expect this to accelerate the development of new gold-based therapeutics.
