Evolution of electronics to alter metals demand base

The electronics industry has been one of the few bright spots for metals demand this year as the global shift to home working and educating boosted the need for certain products and data transmission. But the coming years could bring significant changes to the profile of this demand base, as evolving technologies alter how various metals are used and bring new entrants into the market.

Growth in the technology hardware space is shifting from personal and consumer products to computing and communication infrastructure, senior consultant at US-based Prismark Partners Renzo DeMeo said this week at the 61st General Assembly for the Tantalum-Niobium International Study Center (TIC). And this shift will bring new requirements and a new base of downstream metal consumers.

Breaking down the tech hardware sector, DeMeo expects the consumer and enterprise devices segment to achieve a compound annual growth rate (CAGR) of 2pc in 2019-24, compared with 3pc for military and aerospace, 4pc for industrial/instrumentation/medical, 6pc for automotive electronics and 7pc for computer and communication infrastructure. Wearable electronics are projected to achieve 15.2pc CAGR over the period.

Breaking the sector down through an alternative lens, the internet of things (IoT) market is set for 13pc CAGR over the five-year period, and the artificial intelligence meets internet of things (AIoT) market is poised for 32pc growth, DeMeo said.

"5G build-out is the enabling factor for everything," DeMeo said, also stressing the critical roles that machine learning and Edge computing will play. The impact of Covid-19 on supply chains has delayed the implementation of 5G but potentially only by a year, European Passive Components Institute (EPCI) president and chief executive Tomas Zednicek said. If anything, the pandemic has underscored the need for technology solutions and connectivity, he said.

"The connectivity piece of the business is really our focus," US-based Kemet Electronics senior vice-president Travis Ashburn said, looking forward amid a year of robust sales. The implementation of 5G will be a "primary demand driver" because it will continue to increase the connectivity in hardware, pushing up demand for key metals including tantalum.

Ashburn also pointed to the likelihood of significant growth within data storage, machine-to-machine connectivity — such as autonomous driving, which will require very high-end computing and low-latency — and connected homes, which will encompass security, white goods and entertainment.

The implications of all this for metals consumption are very diverse and at the forefront of technological research. Overall demand for electronic minor metals is projected to increase in the coming years, but the precise applications and ways in which the metals are used are likely to evolve. The past few years have seen significant investment in the development of new compound semiconductors such as gallium-nitride (GaN), in part because of the new requirements that 5G will entail for chips. Looking at tantalum specifically, DeMeo anticipates that smartphones, personal computers (PCs) and tablets will no longer be key drivers of consumption, but the expansion of global computing and communication infrastructure will require numerous miniaturised devices that benefit from tantalum powder's volumetric efficiency in capacitors.

The metals demand base is also expected to undergo some geographical shifts, with a number of hardware manufacturers — mostly Japanese and American — planning to relocate production sites away from China. Most of these companies are eyeing alternative locations in Asia — such as Vietnam, Taiwan, India and the Philippines — with Mexico also being considered by some US firms.

A wide range of products is caught up in these relocations including PCs, telecoms devices, automotive equipment and cameras. And the shift could result in "separate but parallel supply chains", as "efficiency from scale takes a backseat to risk mitigation, geopolitical rivalry, regional proximity and tariff avoidance", DeMeo said.

By Ellie Saklatvala