From Gold Jewelry To Consumer Electronics, How The Price Surge Is Stress‑Testing Global Supply Chains

Between 2025 and 2026, two price trajectories that appeared unrelated climbed sharply in parallel: international gold, which repeatedly set new records, and memory chips together with the broader consumer electronics supply chain, propelled by demand from AI servers. Viewed solely through the lens of price movement, this pattern resembled a conventional upcycle that should have benefited both Hong Kong’s gold and consumer electronics sectors. In practice, however, the outcome has been markedly different. After global gold prices breached USD 4,000, 4,100 and 4,200 per ounce in October 2025, established jewelry houses Lao Feng Xiang, Chow Tai Fook and Chow Sang Sang recorded cumulative declines of roughly 12%, 19% and 12% respectively in the fourth quarter.

A comparable divergence has emerged in electronics. Since October 2025, the AI‑driven “super cycle” prompted major suppliers such as Samsung, Micron and SK Hynix to raise prices, yet the consumer electronics segment has adjusted downward: Sunny Optical Technology has fallen about 30% and AAC Technologies has declined roughly 18% to date. More consequential than share‑price volatility, demand has demonstrably softened. Elevated gold prices are suppressing jewelry purchases, while PC and smartphone shipments are under pressure. The China Gold Association reports a 26% year‑on‑year decline in national gold jewelry consumption in the first half of 2025, and industry forecasters including IDC and TrendForce project that global PC shipments in 2026 may contract between 4.9% and 9%, with smartphone volumes expected to fall by at least 2%.

The simultaneous occurrence of record prices and weakening demand undermines the traditional assumption that price increases equate to broad‑based prosperity. Hong Kong’s equity market, which spans resource producers, component suppliers and branded end players, is effectively undergoing a stress test of supply‑chain resilience and valuation frameworks.

At the upstream end, miners and core component producers have largely captured the upside from price appreciation. Shandong Gold reported a 91.5% year‑on‑year increase in net profit for the first three quarters of 2025, and Zijin Mining anticipates full‑year net profit growth in the range of approximately 59%–62%. Downstream, however, jewelry retailers and consumer brands face a different reality: high raw‑material prices are eroding consumer willingness to purchase products priced by weight, forcing retailers to close underperforming outlets, refine channel strategies and reposition product assortments. In the fourth quarter of 2025 alone, Chow Tai Fook closed 228 retail locations, while other heritage jewelers and regional groups pursued similar store rationalizations and product‑quality upgrades. This dynamic signals a shift in value creation for jewelry firms from passive exposure to gold prices toward active capabilities in merchandising, design and channel efficiency.

A parallel mismatch is evident in the consumer electronics value chain, centered on memory chips. The recent price escalation is not a reflection of renewed PC or smartphone demand but rather the reallocation of high‑end capacity to AI server applications. Major manufacturers redirected capacity toward HBM and DDR5 production and, in some cases, retired older lines, causing supply of mature‑process chips to tighten and cost pressures to cascade downstream. With end‑market demand subdued, brands have limited ability to pass higher component costs to consumers. Lenovo Group, for example, has absorbed incremental costs to stabilize retail pricing and protect market share, compressing margins in the process. Midstream suppliers such as Sunny Optical face the dual squeeze of rising upstream input costs and intensified downstream price pressure; analysts have adjusted ratings accordingly, citing increased shipment uncertainty and ongoing customer cost compression for mid‑ and low‑end products.

Unlike prior commodity cycles tied to rapid sector growth, such as new energy, the current price increases for gold and memory do not herald a synchronized, favorable cycle across the entire supply chain. Instead, they expose structural mismatches that weaken internal stability. The central challenge for firms is no longer merely surviving a cyclical swing but identifying resilient strategic responses when price signals no longer reliably indicate demand strength.

Under these conditions, structural reorganization becomes the dominant theme. The World Economic Forum’s 2026 Global Value Chain Outlook characterizes the present era as one of “structural uncertainty.” Historically, rising input prices coincided with expanding demand, enabling companies to offset cost pressure through volume growth. Today, price increases can themselves trigger demand contraction, straining inventory turnover, cash conversion and capacity utilization. As a result, corporate performance is diverging, and the decisive differentiator is whether a company can consistently create and capture higher added value.

In the jewelry sector, dependence on cyclical price windfalls is diminishing; brands must increasingly rely on design, cultural storytelling and channel execution to sustain margins. The recent popularity of premium traditional Chinese craftsmanship reflects a consumer shift from purchasing based on metal weight to buying for aesthetics and cultural resonance, mirroring the evolution of Western luxury from material value to brand and design premiums. Chow Tai Fook’s fourth‑quarter 2025 results illustrate this transition: the retail value of priced jewelry rose 59.6% year‑on‑year, indicating a gradual reduction in reliance on weight‑based sales. Over time, profitability will be anchored more in product strength and brand equity than in fluctuations of the gold price.

A similar imperative applies to consumer electronics suppliers. Midstream component manufacturers that remain in highly standardized, price‑competitive segments will see profit elasticity erode; migration into higher‑value applications is becoming a survival imperative. Sunny Optical has shifted growth emphasis toward automotive lenses and augmented‑reality optics to raise average selling prices and reduce dependence on smartphone cycles, and it has announced plans to spin off its automotive optics business for independent listing. This approach parallels strategic moves by other technology groups that isolate high‑growth businesses to concentrate resources and enhance valuation. AAC Technologies is likewise orienting investments toward AI hardware and sensing systems to support next‑generation terminals. These initiatives represent competition for “value anchors” within the supply chain.

A new supply‑side transformation cycle is underway. Companies cannot passively await a cyclical recovery; they must proactively migrate to higher‑value, higher‑barrier segments and reestablish their positions in the value chain. Firms that remain anchored in low‑value activities will face persistent margin compression and valuation discounts. Consequently, the pricing logic across Hong Kong‑listed supply‑chain names will be reshaped.

For more than a decade, asset pricing often followed a cycle‑based logic: price increases led to demand expansion and improved profitability. As prices increasingly exceed demand tolerance, that framework is breaking down. Long‑term value now accrues to firms that preserve operational certainty amid volatility rather than to those most exposed to short‑term price gains. In this environment, traditional cyclical indicators can mislead; price spikes may coincide with sales declines, margin pressure and cash‑flow stress, while simultaneously accelerating structural transformation and resource reallocation. Companies that secure upstream control over resources, technical standards or system definitions gain stronger pricing power and allocation authority. Lenovo Group’s evolution from a PC manufacturer to a hybrid AI solutions provider, and BYD Electronics’ extension of manufacturing capabilities into AI server and liquid‑cooling segments, exemplify moves to capture new, higher‑growth opportunities. On the demand side, brands that upgrade positioning and product narratives—such as Lao Feng Xiang, Chow Tai Fook and Luk Fook Holdings—are reanchoring pricing around craftsmanship and cultural storytelling, thereby reducing passive exposure to metal‑price volatility.

Conversely, enterprises lacking resource or technological moats and unable to execute credible product or track upgrades are likely to endure prolonged discounts: rising input prices will squeeze profits while demand volatility constrains valuation. In short, Hong Kong equities are entering a phase defined by structural divergence. Investors evaluating companies affected by the global price surge must determine which firms can sustain volumes, cash flow and structural growth when price shocks recur. The bifurcation between traditional weight‑priced gold jewelry and high‑end craft products, together with the demand uncertainty confronting consumer electronics in 2026, provides an early and tangible signal of this valuation‑anchor migration.