Frost & Sullivan Insight
AIHigh prosperity of PCB and technological iteration have led to a sharp increase in the consumption of drill bits for production consumables and price rises, prompting listed companies to expand production significantly. Under this context, what is the current supply and demand situation in this industry? As server technology continues to evolve, how will the mainstream technical routes for drill bits change? Where are the industry barriers? What will be the future development trend? … …
Frost & SullivanFrost & Sullivan, hereinafter referred to as "Frost & Sullivan", Senior Partner and Managing Director Jia Pang gave an interview with Cailian News, discussing AI server PCB micro-drill bits: a real bottleneck or a false proposition.
Daily Economic News
Q:Recently, some market voices have suggested that the biggest bottleneck in globalAI computing power is not chips, optical modules, or advanced packaging, but a drill bit with a diameter of less than 0.2 millimeters—high-layer PCB boards used to carry GPUs rely heavily on high-end micro-drill bits with a length-to-diameter ratio of over 30 times during drilling, and such drill bits are currently extremely scarce. How do you view this assessment? In actual supply chains, does the shortage of these drill bits truly pose a major bottleneck to the mass production of AI servers (such as NVIDIA GB200 series)?
Jia Pang
Senior Partner and Managing Director of Frost & Sullivan China
This assessment has its industrial logic, but the wording needs adjustment—It accurately captures that the manufacturing of AI server PCBs is entering a precision processing bottleneck stage. However, labeling the drill bit as the “biggest single bottleneck” is an exaggeration.
From the demand side,Represented by GB200 and NVL72, the new generation of AI servers have 24 to 40 layers of PCBs compared to 12 to 16 layers in traditional servers. Combined with the widespread use of ultra-low loss materials such as M8 and M9, as well as quartz fiber cloth, the material hardness increases, and drill damage becomes more severe, leading to a doubling of drill bits per board. The supply side is highly concentrated, with only a few high-end micro-drill bit manufacturers globally capable of mass production, mainly Japanese companies like Union Tool and Taiwanese Topoint. The tight supply is an objective fact.
But from the perspective of overall production, the drill bit is“an implicit bottleneck” rather than a “main bottleneck”. Currently, the core constraints in AI server mass production still lie in CoWoS advanced packaging capacity, HBM supply, high-speed optical modules, and advanced CCL materials. The real impact of drill bits is that as PCBs evolve toward ultra-high layers and high density, the delivery delays and yield fluctuations of drill bits systematically amplify the PCB manufacturing bottleneck, which then affects the delivery timeline of complete machines. It is one of many “long-tail bottlenecks” in the AI hardware industry chain, and its strategic importance is increasing, but it has not yet become a single variable determining the global AI computing power expansion rate.
Q:It is reported thatThe M9 high-frequency material used in AI servers significantly reduces the service life of PCB drill bits, leading to a sharp increase in drill bit consumption and driving price and volume growth in the high-end drill bit market. Compared to ordinary drill bits, what is the price premium and trend of these high-end drill bits?
Jia Pang
Senior Partner and Managing Director of Frost & Sullivan China
High-frequency high-speed materials like M9 improve the fiberglass density, material hardness, and processing difficulty compared to traditional FR-4. During processing, drill bits are more prone to wear, breakage, and rough hole walls, forcing AI server PCB manufacturers to switch to ultra-small diameter, high-length-to-diameter ratio, and coated high-end drill bits.
From a price perspective, the premium is considerable. The unit price of ordinary standard drill bits is around1 to 2 yuan, while high-end products with ultra-small diameter and high-length-to-diameter ratio for AI server PCBs generally cost more than ten yuan, with a premium of ten times or more. Some extreme specification products have even higher premiums. The pricing logic is that high-end drill bits require high-precision cemented carbide substrates, precise coating processes, and strict micro-hole size control, making the manufacturing barrier much higher than traditional products.
Judging from trends, high-end drill bits are currently in a channel of both volume and price growth. On the demand side,As the number of PCB layers in AI servers continues to increase and the penetration of M9 materials rises, both factors drive up drill bit consumption per board. On the supply side, global production capacity for ultra-small diameter high-end drill bits is mainly held by Japanese manufacturers, and significant expansion is difficult in the short term. The supply-demand mismatch provides continuous support for prices.
Q:How do you view the future growth potential of the high-end drill bit market?What is the key to the next round of competition among the main players in the PCB drill bit industry?
Jia Pang
Senior Partner and Managing Director of Frost & Sullivan China
High-endThe medium- to long-term growth logic of the PCB drill bit market is clear and sustainable. The core drivers come from three parallel trends: the generational leap in the number of PCB layers in AI servers, the increase in the penetration of high-frequency materials like M9, and the growing demand for high-layer, high-density PCBs from emerging applications such as high-speed switches and automotive electronics. Compared to traditional consumer electronics scenarios, AI-related PCBs require higher precision, yield stability, and consistency in drilling. Drill bits are evolving from “low-value consumables” to “key tools that affect yield”, and their value and strategic importance are increasing systematically.
In terms of product direction,Ultra-small diameter drill bits below 0.2 millimeters, high-performance coated drill bits, and high-length-to-diameter ratio products suitable for high-layer boards will be the main growth areas in the future.
The dividing line of the next round of competition has shifted from simply capacity scale tothe integrated strength of “materials, processes, and customer validation”. Specifically: coating technology determines the wear resistance and service life of drill bits, which is the core differentiation of products; ultra-small diameter and high-length-to-diameter ratio products require extremely strict requirements for cemented carbide formulations, processing accuracy, and yield control, and process expertise cannot be quickly replicated; high-end drill bits entering the supply chain of leading PCB manufacturers must go through a long certification process. Once introduced, customer stickiness is very high, and the replacement cost for competitors is extremely high. Additionally, the high construction pace of the AI industry chain requires suppliers to have stable delivery and rapid response capabilities—manufacturers with high-end technology, large-scale production, and agile delivery capabilities will occupy a more advantageous position in the reshaped market landscape.
*This interview was published by Cailian News. The author is Lu Tingting. The original title is: PCB Drill Bit Volume and Price Growth Industry experts believe the shortage will persist in the next two years Shortage of tungsten rods may limit production expansion|Fax
