30 April, 2024
| Tonnes | Q1'23 | Q1'24 | Year- on-year % change |
|
| Technology | 71.2 | 78.6 |
|
10 |
| Electronics | 57.1 | 64.4 |
|
13 |
| Other Industrial | 11.7 | 11.9 |
|
2 |
| Dentistry | 2.4 | 2.3 |
|
-5 |
Source: Metals Focus, World Gold Council
The reported Q4 2023 recovery in the electronics sector continued into early 2024 as production increased across most segments in East Asian countries. This was driven by supply chain restocking and emerging AI-related opportunities. Overall, technology demand is expected to continue its upward trend throughout the year.
Gold demand in the electronics sector increased in Q1. Expected growth in AI-related devices and infrastructure was reportedly behind much of this recovery. For example, analysts at Gartner forecast strong growth for AI-enabled PC and smartphones,1 alongside stabilising demand for traditional devices after almost two years of decline.
Demand from the wireless sector surged during Q1, with strong growth reported in several areas. The replenishment of depleted inventories across the supply chain gained pace and the release of new smartphones led to an increase in power amplifier demand.2 The rapid growth of cloud computing catalysed by the AI boom boosted demand for high-end communication chips. Meanwhile, the adoption of low earth orbit satellites (LEOs) has moved faster than expected as operators accelerated deployment and expanded new applications. Looking forward, the evolution of WiFi-6 to WiFi-73 is expected to provide further support throughout 2024 alongside the ongoing stabilisation of the consumer electronic market.
Gold used in Light Emitting Diodes (LEDs) also strengthened during the quarter. This was fuelled by another strong period of automotive demand, as well as a resurgence in demand for displays/panels, helped by the prospect of major events such as the Paris Olympics and Euro 2024. After inventories in the panel industry ended 2023 at normal levels, Q1 saw an increase in stocking activity and a 5-10% rise in capacity utilisation. We expect this rebound in the backlight LED market to last for the first half of the year at least.
Memory chips, traditionally a steady source of demand, also reported Q1 growth. DRAM and NAND-Flash saw significant upticks in procurement as downstream users stockpiled specific components for AI-related applications. AI is certainly the driving force behind this strong demand and in turn has boosted demand for High Bandwidth Memory (HBM).4 Earnings of major memory manufacturers such as Samsung are likely to be fuelled by this “AI-driven memory upturn cycle” as chip prices rebound over the coming two years.5
The Printed Circuit Board (PCB) sector was the only segment to record a small fall in demand. Q1 is the traditional low season for PCBs, but consumer electronics manufacturers exercised caution in their orders due to an uncertain outlook for H2. There has also been considerable structural change in the sector as PCB manufacturing continues to be transferred to South East Asian countries such as Thailand, Vietnam and Malaysia.6 However, demand from the automotive sector remains healthy and capacity utilisation rates are expected to rise q/q throughout the year.
At the aggregate level, all four major electronics fabrication hubs around the world recorded a y/y increase in gold demand during Q1: Japan – 19t (24.0%); South Korea – 6t (20.2%); the US – 17t (1.6%), and Mainland China and Hong Kong – 17t (18.5%).
Other industrial applications recorded a y/y increase of 2% to 12t during Q1, again mostly due to the post-COVID recovery in China. In contrast, Italy saw some losses due to non-price-related substitution in plating options and Indian offtake fell as a result of weak discretionary spending that fed through to weak gifting demand. Dental demand fell 5% y/y to 2t due to ongoing structural losses.
