Zheshang: AI wave drives PCB prosperity, upstream cutting tools see rising volume and prices

Zheshang released a research report stating that China's share of the global PCB market rose from 54.2% (2021) to 57.5% (2025); AI high-performance computing is driving demand for high-end boards, and the global server PCB market size CAGR is expected to be about 11.2% from 2026 to 2030, far exceeding the overall PCB market's about 5.3%; the development of the AI industry is driving PCB evolution toward high layer counts, and PCB drill needles are expected to achieve both rising volume and prices. The computing power wave and domestic substitution are resonating, and it is recommended to pay attention to targets in the PCB drill needle and cutting tool industry chain. Zheshang's main views are as follows: PCB: Known as the "mother of the electronics industry," China's share is close to 60%; AI computing power drives demand for high-end boards, and the server PCB market growth rate far exceeds the overall market AI high-performance computing is driving demand for high-end boards. From 2021 to 2025, the global PCB and server PCB market size CAGRs were about 2.3% and 20.9%. From 2026 to 2030, they are expected to be about 5.3% and 11.2%; China's share of the global market rose from 54.2% (2021) to 57.5% (2025), driven by the triple forces of emerging technologies, high-performance evolution, and policy support. PCB cutting tools: AI server volume ramp-up drives demand for drill needles, milling cutters, and other processing consumables PCB cutting tools are divided into drill needles, milling cutters, and special cutting tools, and are core consumables for drilling and shaping processing; from 2026 to 2030, AI server shipments will rise from 3.1 million units to 6.5 million units, with a CAGR of over 20%, which is expected to drive a surge in consumption of high-precision processing consumables. PCB drill needles: Benefiting from the large-scale volume ramp-up of AI servers, demand for high-end drill needles is expanding, and PCB drill needles are expected to achieve both rising volume and prices PCB drill needles are the core tool for drilling PCB boards. Benefiting from the AI wave, the PCB drill needle industry is expected to usher in both rising volume and prices. Drill needles are mainly used for mechanical drilling to achieve interlayer electrical connections, and downstream board-type demand is diverging (needle breakage rate for ordinary boards <0.1%, high-layer HDI and IC substrates <0.01%). The development of the AI industry is driving PCB evolution toward high layer counts, placing higher performance requirements on PCB drill needles, focusing on high aspect ratios, special coatings, and high wear resistance. The proportion of drill needles with 30x diameter or above at Guangdong Dtech Technology rose from about 4% (26Q1) to about 12% (August 26), with the pace of increase significantly accelerating in 26Q3; the share of coated drill needles is expected to rise from 35.4% (2025) to 51.6% (2030), and service life has plummeted from about 3,000 uses per drill needle in the past to fewer than 800 uses, imposing stringent requirements on drill needle wear resistance. Market size: The bank believes that the global PCB drill needle market size CAGR from 2026 to 2028 will be about 99%. Among this, the AI PCB drill needle market size CAGR from 2026 to 2028 will be about 138%, and AI computing power board demand will become the core DRIVE driving the rapid growth of the drill needle industry Competitive landscape: In 2025, the global CR5 reached 75.7%, indicating a high degree of head concentration. In 2025, China accounted for 63.0% of the global PCB drill needle market size, ranking first globally. Among this, Guangdong Dtech Technology led with a 29.2% market share; Jinzhou Precision under China Tungsten and Hightech Materials has deep technical accumulation and is a pioneer in domestic substitution. The four major barriers of technology, customer certification, supply chain and cost control, and capital, along with the three major trends of domestic substitution, intelligentization, and capacity upgrading, are expected to continuously strengthen the advantages of leading enterprises. Suggested attention: Guangdong Dtech Technology, China Tungsten and Hightech Materials, Shareate Tools Ltd, Sf Diamond Co., Ltd., Beijing Worldia Diamond Tools, Up-shine Lighting, OKE Precision Cutting Tools, Zhuzhou Huarui Precision Cutting Tools.Co.,Ltd, Shenzhen Jame Technology Corp., etc. Risk warnings: AI server shipment demand falling short of expectations, downstream PCB manufacturers slowing capital expenditure, market competition, large fluctuations in tungsten raw material prices, and progress in high-end micro drill R&D and customer certification falling below expectations.