There is a saying: competition is inherent in Chinese entrepreneurs.Whether it was steel or coal in the past,followed by real estate,chemicals, cement, large-scale refining, and pesticides,then solar energy and lithium batteries,including the current new energy vehicles,and next, it will probably be the AI industry chain.As long as two indicators appear, there will definitely be a crazy expansion:1. Not affected by resources or technology, for example, gold and other resource stocks cannot be expanded at will, and high-end chips are limited by manufacturing capabilities and cannot be crazily expanded.2. Industry profits begin to explode.Currently, these two indicators are almost perfectly met in the PCB industry.Let’s look at a piece of data:
The above chart describes the expansion situation of international companies, but it is almost certain that this is just the beginning; the real large-scale expansion has not yet arrived. Boldly predicting, as stock prices continue to rise and financing becomes easier, project investments exceeding 10 billion will gradually come in.Do not think that after experiencing the roller coaster of solar energy, these companies will not learn; the underlying logic will never change. What is the underlying logic? Simply put, it is two words: cycle.The cycle never changes.So knowing that there will be an oversupply in the future, does that mean we cannot participate?Definitely not. We must be very clear about the current position in the cycle. In terms of the PCB industry, the next two years will likely still be a prosperous cycle. Of course, a prosperous cycle does not mean that the stock prices of related companies will continue to rise; after all, industry prosperity does not mean every company will benefit. Some companies without competitiveness may be eaten by others during the rapid development of the industry. Such situations exist in every industry during rapid development.Who will benefit the most from the crazy expansion of PCB?Undoubtedly, equipment will benefit first.During the large-scale expansion of solar energy, a number of leading solar equipment stocks emerged:Liancheng CNC: Deeply bound to Longi, a stock that multiplied several times.Maiwei Co.: Equipment for solar panels, increased several times, with a market value reaching hundreds of billions at one point.Jingsheng Electromechanical: A stock that multiplied several times.Jiejia Weichuang: Profits growing year by year.The expansion of lithium batteries also produced leading equipment stocks:Xian Dao Intelligent: Deeply bound to Ningde, a stock that multiplied tenfold.Yinghe Technology, Hangke Technology, and Haimu Star are all former leading stocks.As for the domestic semiconductor industry, due to domestic substitution, a number of leading equipment stocks have emerged:Beifang Huachuang: Growing from a small company with a market value of less than 10 billion to a semiconductor equipment giant with over 270 billion.Mark Twain once said: History does not repeat itself, but it often rhymes remarkably.Like many industries in the past, the PCB industry is about to welcome an epic expansion.The first to benefit will be the equipment stocks.The PCB equipment industry is actually quite fragmented, with many large and small companies. Some foreign companies, due to their technological advantages, earn most of the industry’s profits.Currently, there are not many PCB companies listed on the A-share market, but one company stands out: Dazhu CNC.Dazhu CNC is expected to achieve a revenue of 3.3 billion in 2024, with a global market share of about 6%, ranking first in China, and the global market size is around 7.7 billion USD.
The company is one of the enterprises with the most extensive product layout in the global PCB special equipment field, maintaining a leading market position in 2024, and has ranked first in the CPCA Top 100 list for instruments and special equipment for fifteen consecutive sessions, with a significantly leading revenue scale.
With a competitive product matrix and rich sales experience, the company has accumulated a wealth of customer resources. Its customers include80% of the top 100 global PCB companies in the 2023 Prismark ranking,all companies in the CPCA comprehensive top 100 ranking, and thousands of domestic small and medium-sized PCB companies, including Shenghong Technology (300467.SZ), Founder Technology (600601.SH), Zhendin Technology (4958.TW), Xinxing Electronics (3037.TW), Dongshan Precision (002384.SZ), Aotesi (ATSV.VI), Huatong Co. (2313.TW), Jianding Technology (3044.TW), Shennan Circuit (002916.SZ), Hanyu Bode (5469.TW), Jiantao Group (00148.HK), Hudian Co. (002463.SZ), MEIKO (6787.T), Jingwang Electronics (603228.SH), CMK (6958.T), Dingying Investment Control (3715.TW), and KCE (KCE.SET), among other well-known domestic and foreign PCB manufacturers. The products are exported to major overseas PCB industrial regions in Europe, Japan, South Korea, Southeast Asia, Malaysia, Thailand, Vietnam, and Taiwan.
In this round of epic expansion in the PCB industry, Dazhu CNC will experience three impacts:1. Increase in quantity.As the number one PCB special enterprise in the domestic market, the company has built a three-dimensional product matrix covering multilayer boards, HDI boards, IC packaging substrates, flexible boards, and rigid-flex boards, as well as key processes such as lamination, drilling, exposure, forming, and testing, providing differentiated one-stop process solutions for customers in different PCB subfields. This means that the company can participate in almost every process, thus benefiting comprehensively. In 2024, the company’s revenue increased by 104%, and the semi-annual report for 2025 shows a further increase of 52% compared to last year, and this is not yet the peak of new capacity expansion. Let’s look at a chart:
From the above two charts, we can see that the capital expenditure of PCB manufacturers lags behind revenue by half a year before it starts to increase. 2024 is just the beginning of the recovery for the PCB industry, and it has not yet reached the peak period of 2021.The company’s revenue doubled simply because the industry began to recover, which is certainly related to the 40% decline in revenue in 2023.However, the semi-annual report for 2025 shows a 52% increase in revenue compared to 2024, which is enough to demonstrate that the company’s growth rate is far higher than the industry’s growth rate.2. Increase in value.
From a future development perspective, globally, boards with more than 10 layers, HDI, and packaging substrates are experiencing higher growth rates:
To meet the high-performance requirements of AI servers, PCBs need to be upgraded in terms of layers, materials, and processes.
(1) In terms of layers, traditional server PCBs generally have 6-16 layers, while AI server PCBs typically have more than 20 layers, even reaching 30 layers.
(2) In terms of processes, AI server PCBs require more advanced manufacturing processes, such as back drilling, resin plug holes, and POFV, to improve the reliability and stability of the circuit boards, thereby increasing their value.
(3) At the same time, in terms of structure, high-multilayer HDI boards have complex structures, with various types of vias including buried vias, through vias, back drill vias, blind vias, and interlayer blind vias, all concentrated on a single PCB, integrating the dual characteristics of high-multilayer boards and high-density boards.
The value increment brought by the generational upgrade of PCB equipment is several times. For example, in drilling equipment, the value changes from traditional mechanical drills to CCD drills to CO2 laser drills to UV laser drills, with values changing from 700,000-1,000,000 to 1,000,000-2,000,000 to 2,000,000-3,000,000 to 4,000,000, with each generation bringing a doubling of value growth. The company’s main revenue comes from drilling equipment, with the semi-annual report for 2025 showing that revenue accounted for 71%:
3. Increase in market share.Compared to domestic companies, while other companies are still researching single processes, it has already developed a “full set of dishes” for drilling, exposure, forming, and testing key equipment.In the multilayer board field, the company’s twelve-axis drilling machine is 50% more efficient than its peers, and in the high-end HDI board market, the newly launched laser drilling equipment can accurately hit nano-level targets,making it the best choice for PCB companies in the multilayer board field to reduce costs.
The company’s “one-stop service” capability is particularly appealing during the expansion wave. Last year, Shenghong Technology expanded and purchased 23 drilling machines and 8 exposure machines from Dazhu CNC in one go; in the new base of Jingwang Electronics in Zhuhai, the installation rate of Dazhu equipment exceeds 60%. It’s like finding a company that can handle design, construction, and soft decoration when renovating a house, which is both worry-free and efficient.
Therefore, the company will capture a significant market share from domestic peers during this round of industry expansion.Compared to international giants, domestic substitution will accelerate. Foreign companies are far less efficient than domestic companies; currently, the delivery time for Japanese and German equipment is one year, while Dazhu can deliver in just three months.
“Imported equipment takes 12 months, while domestic only takes 3 months, and the performance is not inferior.” This is the consensus among PCB factory procurement managers.
A certain Japanese brand’s exposure machine has orders scheduled until the third quarter of next year, and the after-sales response time for German equipment has been extended from 48 hours to two weeks. Dazhu CNC’s factory in Dongguan operates on a “two-shift” system, with a stable delivery cycle for drilling machines within 90 days, and prices are 20%-30% lower than imported equipment.
More importantly, the technology gap is narrowing. Data from the China Electronic Circuit Industry Association shows that the yield rate of domestic mechanical drilling machines has increased from 82% in 2018 to 95%, only 1 percentage point behind Japanese equipment. Last year, in the bidding for high-end production lines at Shennan Circuit, Dazhu CNC’s laser drilling machine defeated Japanese competitors for the first time, capturing 40% of the market share. This breakthrough is akin to the breakthrough of the Deepseek large model and the emergence of domestic lithography machines.
In terms of capacity, the projects funded by the company’s IPO are also about to be put into production by the end of September, perfectly benefiting from this wave of crazy expansion:
Summary:1. The epic expansion of the PCB industry is beginning, and downstream companies’ capital expenditures will increase significantly. As stock prices continue to rise, there will inevitably be large-scale financing, providing ample ammunition for faster expansion. This trend is not subject to the will of any person or institution; the cycle will guide them to do so. Therefore, the upstream equipment will undoubtedly be the biggest beneficiary, and as the industry leader in domestic PCB equipment, it will inevitably become the biggest beneficiary of this round of expansion.2. Since the expansion mainly involves boards with more than 18 layers or HDI boards, equipment upgrades are inevitable, which will lead to an increase in product value, and for the company, gross margins will rise rapidly.3. Time is money, and efficiency is life. For downstream companies, everyone hopes to expand as quickly as possible, but German and Japanese companies simply do not have enough capacity and are less efficient, which provides domestic companies like Dazhu with an opportunity to overtake on the curve.As of last Friday, the company’s market value was 37.5 billion. Considering the continuous increase in quantity and price, profits in the second half of the year will exceed those in the first half, with an annual profit of about 700 million. According to broker analysis, profits in 2026 are expected to exceed 1 billion. Currently, the corresponding PE is about 55 times and 37 times. Referring to the peak period of solar equipment companies like Maiwei, which had a PE of over 100 times, the company’s valuation still has considerable room for improvement.Considering the epic expansion, the company’s revenue and profits are expected to continue to exceed expectations, and achieving an annual profit of 2 billion or more will not be difficult.Similarly, referring to the solar industry, the annual market size of solar lithium batteries is currently less than 300 billion RMB, but as the leader, Jiejia Weichuang’s net profit in 2024 reached 2.7 billion, and this year is expected to exceed 3.5 billion. Therefore, it is not unreasonable for leading companies in an industry market size of over 500 billion, which is expected to grow to 800 billion in the next two years, to achieve annual profits of 2 billion.The reasonable valuation of the company should be above 50 billion, but considering the fermentation of market sentiment, 200 billion is also possible. Therefore, based on the current market value, there is a potential increase of 33%-433%.