High-end PCB precision tool expansion project officially launched, Tiangong International (00826) accelerates towards high-end material platform upgrade.

The surge in demand for artificial intelligence computing power has driven the continuous prosperity of the entire PCB industry chain. From copper-clad laminates, electronic cloth, copper foil, to midstream PCB factories, and upstream hard alloy rod materials, drill needles, and mill accessories, all sectors have benefited greatly from the wave of AI infrastructure construction, giving birth to many stocks with astonishing growth. Among them are Anhui Tongguan Copper Foil Group (301217.SZ), which surged 17 times in two years, Victory Giant Technology (300476.SZ), which surged 21 times in three years, and Guangdong Dtech Technology (301377.SZ), which surged an exaggerated 31 times in two years. Behind the skyrocketing performance of Guangdong Dtech Technology lies a clear indication of the severe shortage in the PCB drill needle sector in China. In this industrial background, TIANGONG INT'L (00826), which has accelerated its transformation from a traditional special steel leader to a high-end material platform, has extended its business scope to titanium alloys and nuclear fusion materials. It has also accelerated its layout in the PCB micro-drilling field, aiming to add new momentum to the company's upgrade and transformation. Recently, TIANGONG INT'L took a key step in the high-end precision cutting tool field for PCBs. Its indirect subsidiary Jiangsu Tiangong Hard Alloy Technology Co., Ltd. officially launched a construction project on July 7 to expand the production of "300 tons per year of ultra-fine grain PCB cutting tool special bar materials and an annual production of 100 million PCB milling cutters and 300 million PCB drill needles." This marks TIANGONG INT'L's formal launching into the upstream consumables sector of the PCB industry chain. With the technological accumulation of the powder metallurgy mother platform and the process homogeneity of the hard alloy subsidiary, TIANGONG INT'L has significant industrial chain synergy advantages in this project, and the progress is expected to exceed market expectations. With the successful verification of subsequent products and the steady release of production capacity, the PCB micro-drilling and upstream rod material business will not only contribute considerable increments but also establish itself as TIANGONG INT'L's third largest growth engine after titanium alloys and nuclear fusion materials. The contraction of rod material supply has widened the market gap, and cost pressures are accelerating downstream transmission The continuous prosperity of the entire PCB industry chain is rooted in the increasingly thick PCB boards inside AI servers. In order to carry more GPUs and high-speed signals, NVIDIA has stacked boards from H100's 16-18 layers to GB200's 20 layers, and the future Rubin orthogonal backboard will exaggerate to 78 layers, with the board thickness increasing from the traditional 3mm to 8mm. This change in physical structure has directly led to an exponential increase in drilling difficulty. The era when a drill could drill through to the bottom in one go has ended, and now a single hole often requires four different drill needles with varying length-to-diameter ratios to be relayed in segments, doubling the amount of consumables for each hole. More importantly, to cope with the high heat load brought by high computing power, PCBs have begun to use high-silicon special boards such as M9 on a large scale. These boards have extremely high hardness, directly reducing the lifespan of conventional HDI drill needles from 2000 holes to 200 holes, amplifying wear rates by 4 to 5 times, leading to a surge in drill needle consumption in the entire industry to 5 to 8 times that of traditional levels. To work on these "hard bones," only ultra-micro drills with diameters below 0.1mm can be used, and the prices of such high-end products are usually 25 times that of ordinary drill needles, with prices for models compatible with M9 being 15 to 20 times those in the M7/M8 era, forming a solid foundation for the "quantity and price increase" of PCB drill needles. However, more fatal than the shortage of drill needles is the rod material at the front end of the industry chain - the "skeleton" of PCB drill needles. For a long time, high-end rod materials with ultra-fine grains below 0.2mm and high length-to-diameter ratios were firmly held by three Japanese companies - Sumitomo, Mitsubishi, and Kyocera. Sumitomo's AF series (AF209/AF308) alone accounts for more than 40% of the global market share, with almost a monopoly on ultra-fine specifications. However, the industry situation has changed since 2026. Since February, China has stopped exporting tungsten carbide to Japan for three consecutive months. The Japanese companies quickly depleted their low-priced inventories, and in May, the president of Sumitomo Electric confirmed at the financial results meeting that "the supply of tungsten from China has completely stopped, with about 30% of the raw materials being long-term dependent on China." The shrinkage of tungsten stocks has triggered a price surge in rod materials. Sumitomo's AF series adjusted prices twice in January and June, with single increases of 15% - 25%, and some specifications were directly changed to "by order only". Mitsubishi went even further, with upstream superhard alloy billet procurement prices being raised by 300%, and limited supply of high-end ultra-fine grain tungsten steel raw materials. The shockwaves from the upstream have hit down the industry chain, and cost pressures have been transmitted to the drill needle end. Leading domestic drill needle manufacturers have already initiated price increases in July, with Japanese manufacturers proposing "limited delivery of 20%" and lead times lengthening from 4-6 weeks to over 12 weeks (24 weeks for ultra-micro drills below 0.1mm). On one side, with the retreat of the Japanese supply chain on the supply side, and on the other, with NVIDIA's Rubin entering mass production, the cost of consumables for a single hole of AI PCB drill needles has risen from 6.3 yuan to 16.3 yuan. With such severe pressure from both supply and demand sides, the shortage of high-end rod materials is no longer just an "option for domestic substitution" that enhances the industry chain, but a "must-fill demand" that is crucial for the security of the industry chain. As the rigidity of the supply of upstream raw materials like rod materials is far more severe than the capacity expansion of midstream drill needles, whoever can fill this key link first will acquire the entry ticket to the core supply chain of AI hardware. Technology and process homogeneity are expected to accelerate production progress, with annual output value potentially reaching 2 billion after full production The entry of TIANGONG INT'L into the PCB micro-drilling track is not a cross-border gamble chasing hotspots, but a natural extension based on its existing business framework. This means that the company is not starting from scratch in this new business line, but rather accurately transferring the technology expertise of its powder metallurgy mother platform and hard alloy subsidiary to the scene of PCB ultrafine rod materials and micro-drills. This is a unique barrier that other new players entering the PCB micro-drilling sector do not possess. The most crucial and challenging part of the PCB drill needle rod material is the need to press the grain size to below 0.2m, which is the lifeline for ultra-micro drills below 0.1mm. If the grain size is one level coarser, the cutting edge is prone to break when drilling with ultra-micro drills below 0.1mm, especially because the M9 board hardness in AI servers is high, making the tolerance for grain size deviation almost zero. There are fewer than five players globally who can achieve a grain size of <0.2m in ultrafine WC powder, with the Japanese Sumitomo AF209/AF308 (suitable for 0.1-0.8mm micro drills) being the absolute leader in this field. In the category of ultra-micro drills with a diameter of 0.05mm (used for AI/IC carrier boards), Sumitomo has a global market share of about 20-25%, and forms a duopoly with Kyocera. In the most difficult segment of PCB drill needle rod materials, TIANGONG INT'L has the same-source technology "foundation." It is well known that TIANGONG INT'L is the only domestic manufacturer of a full series of powder metallurgy tool steel. With a powder metallurgy steel production capacity of about 1500 tons and a high-alloy powder production capacity of 8000 tons by 2025, the company has been running the powder metallurgy process for 6-7 years. The powder metallurgy steel process for high-speed steel involves "gas atomization to powder hot isostatic pressing sintering forging/rolling". This process controls the particle size distribution, carbon-nitrogen balance, and sintering densification of tungsten carbide powder, which are all core technologies. In addition, TIANGONG INT'L's powder metallurgy steels follow the "iron-based powder + alloying" technology, whereas the production of ultrafine WC bars (raw materials for PCB ultra-micro drill needles and high length-to-diameter ratio milling cutters) follows the "tungsten carbide powder + cobalt bonding phase" path. The core technology of both bottom-layer technologies is "making fine powders and stable sintering." As reported by CCTV earlier, the lifespan of TIANGONG INT'L's powder metallurgy steel has been significantly increased from the traditional 6000 cycles to over 20,000 cycles, indicating that the company's process of "fine powders + high-temperature sintering" has been running for at least 5 years, just needing to be migrated to the WC-based ultrafine bar with the same process. Looking at the downstream drill bits/tools, TIANGONG INT'L's synergies are more obvious. The PCB micro-drilling business line is not a temporary decision made by TIANGONG INT'L in 2026. Its indirect subsidiary Jiangsu Tiangong Hard Alloy Technology, which was established in 2021, focuses on products such as double-helix hole rods, integral hard alloy tools (milling cutters/drill heads/taps), and CNC tool blades. Since 2025, its brand "European Brand" has been upgrading from ordinary hard alloy tools to powder tools (PM-HSS route), entering scenarios such as 3C electronics, Siasun Robot & Automation, aerospace, and more. In other words, for the "five-axis grinding + coating" process required for PCB micro-drilling, TIANGONG INT'L is not a newcomer. The grinding machines and TiAlN/AlCrN coatings required for taps and ultra-diameter milling cutters closely overlap with the equipment and processes of PCB drill needles, with differences only in specifications such as "special screw angles, drill tip geometry, chip grooves". It would take a minimum of 6 months to complete the process. Moreover, the core material of internal cooling drill bits - the double spiral hole rods, has already been mass-produced by Jiangsu Tiangong Hard Alloy Technology. The 300-ton "ultrafine grain PCB special" project is essentially upgrading the double spiral hole rods from "general hard alloy" to "PCB drill needle-specific". Although the specifications of specific raw materials are narrower and the grain size control standards are tougher, the production process is entirely based on the mature existing production lines, indicating a rise in stable foundation, rather than starting from scratch. With the technological homogeneity of the powder metallurgy mother platform and the hard alloy subsidiary, TIANGONG INT'L can achieve large-scale production of ultrafine grain PCB rod material in the shortest time frame of 6 months. This provides the company with great tactical flexibility: on the one hand, it can quickly sell rod material products to downstream drill needle factories facing shortages, precisely taking advantage of the window of Japanese supply constraint, acting as a "water seller"; on the other hand, with the certification of downstream PCB manufacturers, TIANGONG INT'L can quickly expand rod material production capacity and promote the milling cutters and drill needles into mass production through an integrated manner. According to industry estimates, based on current market prices of ultrafine rod materials (comparable to AF209/AF308) at 2000-2300 yuan/kg, AI-coated drills at 1.7-1.8 yuan/piece, and PCB milling cutters at 5-8 yuan/piece, the project's full production: if adopting an integrated model (internal supply of rod materials), annual revenue from end tooling alone could reach 9-14 billion yuan; If part of the rod materials are sold externally, the combined theoretical production value of the project could reach 13-20 billion yuan. It is evident that PCB micro-drilling will become the core engine driving TIANGONG INT'L's performance growth in 2027. But more critical than incremental revenue is the restructuring of the valuation system. As the PCB micro-drilling business transitions from "expectation" to "realization," TIANGONG INT'L will completely break free from the valuation constraints of traditional special steel companies, accelerating its transformation into a high-end material platform. Once the market recognizes its consumables logic, the valuation center is expected to rise above 20 times PE, and with the dual effect of "performance and valuation," the company's market value will be entirely unlocked.