Electronics Industry Crucified On A Cross Of Gold

In Q1 2011 alone, the electronics industry used 79.8 tonnes of gold at a cost of $5.1 billion says the WGC. Although the weight figure is only 1 % up on Q1 2010, the $ figure is 25% up y-o-y because of the rising cost of gold.

So the current run-rate for the cost of the electronics industry's purchase of gold is $20 billion a year.

Dr Richard Holliday, Director of Technology at the WGC, tells me that the semiconductor industry used 130 tons of gold for bonding wire last year.

Because of the rising price of gold, if the chip industry uses another 130 tonnes of gold for wire bonding this year, it will cost $8 billion according to the WGC's figures.

Apart from bonding wire, the other biggest application for gold - also accounting for about 130 tons - was for electro-plating, says the WGC.

The good news is: "A lot comes back in the form of re-cycling," says Holliday, "the gold pays for the cost of re-cycling. If gold wasn't used then it wouldn't be economic to recycle."

In October 2008, Japan's National Institute for Materials Science (NIMS) estimated that high-tech rubbish dumps in the country contained three times as much gold, silver and indium than the rest of the world uses, or buys, annually.

One company which extracts precious metals from rubbish dumps, Asahi Pretec, retrieved 15 tonnes of gold in 2007.

NIMS said that, if the rubbish dumps were properly exploited, Japan would immediately jump into the top five producers of some of these metals along with countries like the Canada, Australia and Brazil.

The genesis of this dumped wealth is Japan's love of new electronics products. The Japanese are early adopters and among the earliest chuck-away-ers. For instance they dump 20 million mobile phones a year.

Nonetheless only 550 tonnes a year of electronic waste gets re-cycled - about 13 per cent of the total, said NIMS, pointing to the potential of recycling activities.

 The World Gold Council's Dr Holliday has a concern - that the electronics industry may switch from gold to copper.

"Some low-end sub-contractors and foundries have been aggressively promoting copper as the main wire bonding packaging solution, as well as advocating alternative non-gold contact finishes," says Holliday, "this record demand shows that gold remains the metal of choice for manufacturers looking for durability and reliability in component manufacturing."

Holliday tells me that SEMI did a survey of its relevant members last year and all but one expressed concerns about using copper.