A recent research report from a Chinese securities firm indicates that the rapid expansion of AI computing clusters and ongoing hardware architecture upgrades are reshaping the supply-demand dynamics of the PCB drill bit industry through both demand scale growth and product specification enhancements. On the demand side, the industry's shift toward high-layer-count and HDI PCBs is boosting both drill bit consumption volumes and product value, with AI-related demand increasingly becoming the core growth driver. On the supply side, despite continuous capacity expansion by domestic and international manufacturers, effective supply release is expected to lag behind demand growth due to constraints such as project implementation rates, actual output efficiency, and the high technical barriers associated with premium products. The firm projects the industry's supply-demand gap will continue to widen, with high-end AI drill bits facing particularly tight supply, positioning leading manufacturers with technological, production capacity, and customer resource advantages to benefit significantly from the industry's "volume and price growth" and tightening supply conditions.

Overseas AI capital expenditure remains robust, sustaining demand for AI servers and PCB drill bit consumables

According to TrendForce statistics, total capital expenditure by the world's eight major CSPs is projected to exceed $710 billion in 2026, representing a year-on-year increase of approximately 61%. The sustained substantial growth in AI capital expenditure by overseas cloud providers is directly driving a rapid rise in global AI server shipments, which in turn stimulates upstream PCB production line expansion. As an indispensable consumable in the PCB drilling process, drill bit demand is expected to grow in tandem with PCB capacity expansion.

The global PCB drill bit market is highly concentrated, with leading Chinese manufacturers holding dominant positions. Guangdong Dtech Technology Co.,Ltd. (301377) and Jinzhou Precision are the top two global players by market share, while Japan's Union Tool and Taiwan's TIPTON serve as traditional regional leaders. Meanwhile, manufacturers such as Oke Precision Cutting Tools Co.,Ltd. (688308), Up-Shine Lighting, and others have accelerated their market entry in recent years, gradually increasing the number of industry suppliers.

Detailed supply-demand gap projections for the global PCB drill bit market

1) Supply side: Based on the firm's calculations, effective industry-wide drill bit supply is projected to grow from 3.87 billion units in 2025 to 9.33 billion units by 2028, representing a compound annual growth rate of approximately 34.06%.

2) Demand side: Total drill bit demand is projected to increase from 3.53 billion units in 2025 to 10.36 billion units by 2028. As total demand grows rapidly, the supply-demand structure of PCB drill bits is expected to shift from a loose supply environment in 2025 to a tight supply scenario by 2028, with the supply-demand gap projected to reach approximately 1 billion units in 2028.

Investment recommendations

The firm recommends monitoring companies including Guangdong Dtech Technology Co.,Ltd. (301377), China Tungsten And Hightech Materials Co.,Ltd. (000657), Union Tool, TIPTON, Oke Precision Cutting Tools Co.,Ltd. (688308), Up-Shine Lighting, and others.

Risk warnings

Risks include global cloud provider AI capital expenditure falling short of expectations, PCB manufacturer expansion and equipment order fulfillment underperforming projections, technological route changes, and intensifying industry competition.