Zheshang Securities: AI computing power, core precision consumables, PCB drill bit volume and price loss resonance opens up room for growth

The Zhitong Finance App learned that Zheshang Securities released a research report saying that PCB drills have ushered in a growth period where the three factors of “volume, price, and loss” resonate. According to estimates, the demand for PCB drills for AI servers is expected to increase from 800 million in 2026 to 3.92 billion in 2030. Resource locking, being close to customers, and continuous iteration work together to help domestic leaders move from leading share to leading high-end. Structural upgrading, industry expansion, deep barriers, and the four main lines of domestic substitution resonate, and the investment value of the sector is outstanding.

The main views of Zheshang Securities are as follows:

PCB drills are the core precision consumables for AI computing power hardware. They are gradually getting rid of the cyclical nature driven by consumer electronics, and ushered in a growth period where the three factors of “quantity, price, and loss” resonate

Amount: The number of PCB layers on AI servers has been raised from 12-16 layers of traditional servers to 24-40 layers, and segmented drilling of thick plates will increase needle consumption; price: The global share of coated drills is expected to rise from 35.4% in 2025 to 51.6% in 2030. The unit price of high-end drills can reach 3-5 times that of ordinary drills, and the growth rate of drill demand is significantly faster than the AI server shipment growth rate; Loss: M8/M9 high-frequency high-speed copper-clad plate penetration reduces the life span of a single drill needle from 2000-3000 holes in FR-4 to about 100-200 frequency holes in M9 Substantial increase.

The booming development of AI computing power lays the foundation for the expansion of the drill bit market

According to data from Prismark and Frost & Sullivan, the global PCB drill bit market has increased from 4.1 billion yuan in 2021 to about 6 billion yuan in 2025; as global AI server shipments increase from 3.1 million to 6.5 million units in 2026-2030, and the number of mechanical holes in single board and the continuous increase in the number of holes in single board, the bank estimates that the demand for PCB drills for AI servers is expected to increase from 800 million in 2026 to 3.92 billion in 2030. Considering the continuous increase in the share of high-end drills, ASP is expected to increase year by year, and the corresponding market space is expected to increase from 1.93 billion to 1.93 billion The yuan increased to 14.88 billion yuan, making it the fastest growing sub-field for PCB drills.

High-end PCB drills have higher barriers to mass production, and those with concentrated leaders are stronger

The quadruple barriers of materials, equipment, process and customer certification create an oligopoly pattern. In 2025, the global CR5 in terms of revenue reached 79.8%. High-end drills require a broken needle rate of less than 0.01%. Customer introduction requires sample testing, batch verification and long-term supply assessment, with deep binding and high switching costs; ultra-fine crystal bar formulations, precision grinding, coating deposition, and micron-level testing together form a comprehensive threshold. In 2025, the top five global manufacturers will have a combined share of 75.7% in terms of sales volume, and the increase in quality requirements for AI servers and IC carriers will further strengthen head concentration.

Resource locking, customer proximity, and continuous iteration work together to help domestic leaders move from leading share to leading high-end

China's tungsten ore accounts for about 79% of the world's production and reserves account for about 53%, and export controls on tungsten related items have increased the raw material costs of overseas manufacturers; mainland Chinese enterprises account for 36% of the world's PCB output value, 43 Chinese companies are in the top 100, with an output value of 30.7 billion US dollars. Domestic drill companies are close to downstream and respond faster; coating technology iteratively superimposes structural upgrades such as ultra-long diameter ratio and ultra-micro diameter. In 2025, domestic enterprises have taken the top two in global drill sales. The average price and gross margin of leading products are rising simultaneously. Leading from low to medium penetration to high end.

Structural upgrading, industry expansion, deep barriers, and the four main lines of domestic substitution resonate, and the investment value of the sector is highlighted

It is recommended to focus on Dingtai Hi-Tech, Chinatungsten Hi-Tech, Xiamen Tungsten Industry, Jiangtungsten Equipment, Xinrui Co., Ltd.: Dingtai Hi-Tech is the global sales leader with the highest purity in the drilling needle business. The proportion of high-end micro drills and coated drills continues to increase, and the most direct benefit is the sharp rise in AI server volume and price; Chinatungsten Hi-Tech's “tungsten resource-bar-micro drill” integration, Jinzhou Precision accelerates production expansion, and the 130 million micro drill transformation project will achieve results in mid-2026; the Xiamen tungsten industry has leading high-end rod strength and benefits from upstream domestic replacement; Jiang Tungsten Equipment plans to raise no more than 1,898 billion yuan to acquire Jiang Jiao, Huamao, and Jiuye The company opened up the tungsten powder-bar chain after the transaction landed; Xinrui Co., Ltd. acquired Huilian Electronics cut into the finished drill needle product to achieve independent manufacturing of the entire process from bar to coating; Oukeyi uses CNC blades as the basic plate and plans to extend Yongxin Precision to PCB micro drilling. Customers cover nearly 80 PCB factories such as Dongshan Precision and Shenghong Technology.

Risk Alerts

Demand for AI servers fell short of expectations; prices of raw materials such as tungsten and cobalt fluctuated greatly; the penetration rate of M8/M9 materials was slower than expected; uncertainty over target acquisition delivery; and competition intensified due to industry capacity expansion exceeding expectations.