Once a spearhead of technological cool, Sony (NYSE:SNE) has been struggling to regain that image ever since its Walkman gave way to the iPod and many industry analysts have questioned whether the Japanese manufacturer can ever return to its glory days. Its latest laptop, however, has been generating much excitement among technology aficionados, thanks in large part to the power of magnesium.
With its sleek grey exterior, the VAIO T13 Ultrabook certainly looks snazzy, and it boasts good, speedy connectivity as well as a long battery life. Its single most distinctive feature, though, is its magnesium and aluminum hybrid frame, which makes the laptop lightweight, yet sturdy; Sony has made a point of highlighting the use of magnesium.
But as much as the success of the latest VAIO product may make or break Sony, strong sales of the Ultrabook could also lead to greater use of magnesium. For Sony is far from alone in producing so-called ultrabook notebook computers, all of which use a magnesium alloy casing to make them portable, powerful, and durable. Yet magnesium producers do not expect any significant rise in demand, and prices reflect that assumption accordingly.
But could demand for magnesium change dramatically with a shift in consumer demand for the latest super-light laptop? According to research group IHS iSuppli, ultrabooks will account for 43 percent of all notebook PC shipments in 2015, up from 2 percent in 2011 and 13 percent in 2012. In the first quarter of 2012, global PC shipments reached 89 million units, up from 87.3 million during the same period a year ago, according to Gartner. Assuming similar consumer demand for PCs in three years’ time, that means at least 38 million ultrabooks with magnesium will be sold in 2015.
“With the introduction of the ultrabook, the computing industry is posed for yet another paradigm shift,” said IHS’s research director and analyst for semiconductor manufacturing. “In the age of the ultrabook, the demand for technology would not be limited to only a few companies.”
Magnesium frames have been on the market for some years, but have mostly been used for rugged computers that undergo heavy-duty use, such as those used in military operations, on construction sites, and for emergency personnel in high-traffic areas. These computers have to be sturdy, which invariably means design and weight are not primary considerations.
Several companies, including Toshiba and Dell, have already launched their own ultrabooks, and PCWorld has declared that the products are “truly attractive…[t]hey’re powerful, flexible, incredibly thin, and durable. If you need a laptop right now, these are among your best options.”
At the same time, the technology publication recommended that those on the fence hold off until 2013, when ultrabooks with a 24-hour battery life enter the market.
The tepid response from magnesium investors about a potential surge in magnesium-using laptops, though, is that even if ultrabook demand soars, the overall need for the metal will still be a tiny fraction of the market.
Laptops “aren’t going to use much” magnesium, said Alex Markin, Managing Director of International Magnesium Group, a wholly-owned subsidiary of CD International Enterprises (NASDAQ:CDII). Rather, it will be the automotive sector that continues to affect the magnesium market the most.
Magnesium producers are also well aware that manufacturers are already concerned about the limited supply of the metal, and that securing a steady supply of magnesium will make them particularly susceptible to trade relations with China. So while Apple’s (NASDAQ:AAPL) MacBook Air uses magnesium-aluminum, others are shifting to fiberglass, which should bring prices down.
Regardless of any potential shift in portable information technology, magnesium producers are unlikely to get excited just yet.
Securities Disclosure: I, Shihoko Goto, hold no direct investment interest in any company mentioned in this article.