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1. Drivers of HDI Demand Growth
•Core Driver of Industry Cycle Upturn: The HDI industry exhibits significant cyclical order fluctuations. Before the fourth quarter of 2024, orders are expected to be unsaturated; from the fourth quarter of 2024 to the first and second quarters of 2025, orders will surge. The core driver is the demand from AI server-related segments. Products related to AI servers driving the growth of HDI demand include: Huawei supercomputer backplanes, NVIDIA GV200 server HDI and GPU substrates, Apple’s new AI version, and NVIDIA GV200 OAM version, which have propelled explosive growth in domestic PCBs.
2. Core Domestic HDI Manufacturers and Technologies
•Leading Manufacturers’ Technologies and Orders: There are four main domestic manufacturers handling AI server HDI orders: Shenlan Circuit, Pengding Holdings, Shenghong Technology, and Huadian Co., Ltd. Shenlan Circuit can produce high-level HDI with more than 24 layers and has close cooperation with Huawei, involving Huawei Ascend and domestic supercomputer backplane servers, accounting for 15% of the high-end market share. Pengding Holdings mainly produces 20-layer thick HDI, including SCP narrow boards and GPU substrates, closely related to the Apple supply chain, accounting for about 10% of Apple’s AI chip boards. Shenghong Technology previously focused on low-level HDI (second and third levels) and high-frequency high-speed boards, and after 2024, it will undertake NVIDIA orders, currently capable of producing 28-layer sixth-level HDI and testing 70-layer multilayer boards, which, if successful, will lead to more NVIDIA orders. Huadian Co., Ltd. mainly produces fourth-level thick HDI and has established factories in Huangshi, Hubei, investing 4.3 billion yuan to build a high-end AI board service base, aiming to upgrade to sixth-level HDI and optoelectronic board modules.
3. Expansion Dynamics of Other Manufacturers
•Manufacturer Cooperation and Order Concentration: Currently, the expansion of the HDI sector shows a trend of multiple manufacturers following suit. Shenghong’s expansion progress is relatively advanced, and leading manufacturers are actively following. Domestic manufacturers such as Jingwang, Guanghe, and Fangzheng have gradually joined the sector. In terms of customer cooperation and order concentration, Pengding Holdings collaborates extensively with Taiwan MD; TTM mainly serves the Amazon supply chain; Shennan Circuit works closely with Huawei, focusing on the Mate supply chain; Shengyi Electronics, leveraging its copper-clad laminate advantages, has undertaken many Google and Mate orders. Additionally, NVIDIA orders are mainly concentrated in Huadian and Shenghong.
4. PCB Production Processes and Equipment Value Proportions
•Process Steps and Equipment Proportions: PCB production mainly involves process steps including lamination, exposure, drilling (mechanical and laser drilling), electroplating, and inspection. The value proportion of equipment in each step varies depending on the scale of the board factory. For a typical small factory with an investment of 200 million yuan, the investment in the lamination step (including press and chemical lines) is about 20 million, accounting for about 10%; the exposure step (including traditional equipment and high-end LDR) has an investment of nearly 20 million, also accounting for about 10%. The drilling step (mechanical + laser) accounts for over 30%, with mechanical drilling being the main part: 100 mechanical drilling machines using domestic Dazhu (unit price about 600,000) would require an investment of about 60 million; if using the German Xumo brand (unit price about 900,000), the investment would be about 90 million. Laser drilling equipment has a higher unit price, ranging from 3.8 to 4.5 million. Domestic equipment can replace electroplating equipment, with a single electroplating line (e.g., Dongwei electric power sheet, VCP line) requiring an investment of about 10 to 20 million. Inspection equipment has a low proportion, requiring only a small amount, including German GGST non-pin testers and domestic AOI equipment. The investment structure of equipment is influenced by process demands; high-end HDI boards (such as sixth-level HDI, boards with more than 20 layers) require higher precision in equipment, necessitating German Xumo drilling machines to handle complex requirements such as mechanical back drilling and server boards; ordinary board factories prefer domestic brands like Dazhu due to the advantage of payment terms (10-20% deposit, divided into 24 installments). In terms of orders, by 2026, orders for lamination factories, internal pressure factories, electroplating factories, drilling factories, and laser drilling machines have been scheduled until mid-year. High-end equipment such as German Xumo internal pressure machines and Xumo drilling machines are in short supply. Among major customers, Huashi and Shenghong Technology collectively use nearly 2,000 Xumo drilling machines; Shengyi Electronics uses 70% Xumo drilling machines and 30% Dazhu; Fangzheng Group’s 1.1-1.2 billion yuan investment project in Thailand serves NVIDIA, ordering over 100 Xumo drilling machines and 20-30 laser drills.
5. High-Level HDI and Equipment Technical Requirements
•Differences Between HDI and Ordinary PCB Features: High-level HDI exhibits significant differences from ordinary PCBs in features. In terms of layers, high-level HDI can reach over 20 layers (e.g., sixth-level 24 layers), while ordinary PCBs typically have 6, 8, or 12 layers, with 12 layers being considered high. Regarding hole diameter, high-level HDI has smaller hole diameters, requiring laser or large bead laser drilling for holes below 0.15mm; ordinary PCB hole diameters are mostly above 0.15mm, using mechanical drilling. In terms of blind and buried hole distribution, high-level HDI requires controlled depth drilling to specified layers (e.g., 12 or 18 layers), with precision requirements of ±20 microns; if excessively deep, it may lead to board waste worth thousands or even tens of thousands of yuan; ordinary PCBs mainly use through holes and have lower layer counts. Material requirements for high-level HDI are stringent, necessitating the use of top-tier materials such as quartz cloth, 2229HVLP copper foil, with suppliers mainly being Japanese Mitsui, Furukawa, Fukuda, etc.; ordinary PCB material requirements are lower, with domestic suppliers (e.g., Copper Crown, Defo, Taiwan Changchun) being sufficient. Additionally, high-level HDI requires high-demand copper-clad laminates (e.g., Taiwan Taiguang, TUC) and involves key materials like K2 wave cloth.
•Comparison of Mechanical Drilling and Laser Drilling Technologies: Mechanical drilling and laser drilling differ significantly in efficiency, applicable scenarios, configuration ratios, and cost maintenance. In terms of efficiency, laser drilling can achieve 1,700 holes/second on a single surface and 3,400 holes/second on a double surface; mechanical drilling is about 450 holes/minute. In terms of applicable scenarios, laser drilling is used for blind and buried holes below 0.15mm (requiring UV copper window opening followed by CO2 burning holes), while mechanical drilling is used for through holes above 0.2mm (e.g., 0.2mm, 0.25mm hole diameters). In terms of configuration ratios, ordinary HDI has a mechanical to laser drilling ratio of about 10:1; for example, Fangzheng has 100 mechanical drills with only 10-11 laser drills. In terms of cost and maintenance, 10 laser drills cost about 40 million, with high maintenance costs (e.g., expensive laser head replacement); mechanical drills are cheaper, more flexible but prone to breakage and alarms, requiring frequent tool changes and grinding (every 2,000 drills need grinding), with lower stability. Additionally, mechanical drilling requires depth control (e.g., drilling only to the 10th or 18th layer), which demands high precision, and efficiency is limited by depth control.
•Drilling Equipment Brands and Prices: Mainstream drilling equipment brands include German Xumo, Japanese Hitachi (including joint venture brand Weiya), Taiwanese Dongtai/Da Liang, and domestic Dazhu/Weijia. The price differences among various series of German Xumo are significant: the ordinary N6/X6 series is priced at $128,000 to $135,000 (about 900,000 yuan, exempt from import tariffs, but VAT must be paid); the HDI-specific GDI series is priced at $150,000 to $160,000 (adjusted based on configuration); the high-end MXY series (including CCD back drilling, optical ruler technology, controllable depth milling/grinding) is priced at $380,000 to $400,000, representing monopolistic technology in the industry. Among other brands, Taiwanese Da Liang’s controllable depth milling equipment is priced at about $200,000, which can compete with Xumo; Dazhu and Weijia’s technology has not surpassed Xumo, with insufficient stability. Japanese Hitachi (including Weiya) and Taiwanese Dongtai also have a market presence, but Xumo dominates the high-end field.
6. Mechanical Drilling and Laser Drilling Production Capacity
•Mechanical Drilling Orders and Delivery Times: Historical sales of graphite mechanical drills have remained between 300-400 units in the three years post-pandemic, not exceeding 500 units. Starting in 2024, order conditions are improving, with foreign orders increasing in some months, and clients like Shenlan purchasing large quantities, with just a few clients like Shenlan purchasing around 500 units, along with purchases from the Shanghai market, gradually increasing production. From the second half of 2024 (fourth quarter), supply will be in short supply, with sales exceeding 500 units and outstanding orders, and sales are expected to reach 1,000 units in 2025. In terms of delivery times, the original delivery time for German Xumo mechanical drills was 8 months (6 months for manufacturing + 1.5 months for sea transport + 0.5 months for customs clearance); due to the war, transportation routes need to be rerouted, extending the delivery time to 10 months; domestic Dazhu mechanical drills rely on local procurement (e.g., Shandong granite bases) and large stockpiling (negotiating with suppliers for 1,000 units of optical rulers, spindles, servo motors, etc.), with a delivery time of 3-4 months, faster than imported equipment. Domestic equipment has advantages in payment methods, usually requiring a 20% deposit, allowing machines to be used first, with subsequent payments divided into 12-24 installments, and close channel relationships, making sales concepts more grounded. Additionally, while German foreign-funded enterprises have top-notch technology (e.g., backup drilling technology, controllable depth drilling technology, CCD technology), their high prices and lack of after-sales maintenance personnel result in annual sales of only three to ten units for graphite laser machines.
•Laser Drilling Production Capacity and Scheduling: The annual production capacity of 3.0 color laser drills is about 600 units, with sales in January 2024 being 300-400 units, and sales in 2025 expected to reach 500 units. Due to capacity constraints, some orders need to be scheduled for delivery in 2026. In the market, due to high prices and a lack of after-sales maintenance personnel, annual sales of laser drills are low, only three to ten units.
7. High Value-Added HDI and Material Requirements
•HDI Value and Material Demands: HDI boards exhibit significant added value in different scenarios. In the AI server field, their mainboards serve as core components for connecting, conducting, and supporting medium-speed transmission systems, with high added value, with a single machine box board priced at up to 120,000 yuan; sixth-level GDR boards with more than 20 layers can reach several tens of thousands of dollars. The PCB value of ordinary servers is also relatively high, with the PCB value of a single server approaching 10,000 yuan. HDI boards have strict requirements for key materials, necessitating the use of top-tier materials such as quartz cloth (e.g., the quartz cloth used by NVIDIA), 2229HVLP copper foil, etc. Material suppliers prioritize international brands, with copper foil mainly sourced from Japanese Mitsui and Furukawa, and copper-clad laminates leaning towards brands like Taiwan Taiguang and TUC. Furthermore, HDI board production requires comprehensive support, involving competitive advantages in high and low voltage processes, and cannot be completed by a single step.
Q&A
Q: Starting in 2024, which specific subcategories or segments will primarily drive the upward cycle of the PCB industry?
A: The upward cycle of the PCB industry will primarily be driven by the demand for PCBs related to AI servers, with specific subcategories including Huawei’s generative products, domestic supercomputer backplanes, NVIDIA GV200 server GPU substrates, Apple’s new AI version, and GV200 OAM version. The four main companies handling related orders domestically are Shenlan Circuit, Pengding Holdings, Shenghong Technology, and Huadian. Among them, Shenghong Technology is progressing rapidly in the field of computing power demand explosion, with other companies following closely.
Q: Shenghong Technology is leading in the AI server-related HDI field, and leading companies are following up with expansion. How can we assess the continuity and prosperity of expansion in this field? Will more manufacturers follow and enter this sector?
A: The current industry shows a trend of multiple manufacturers following: Jingwang Electronics has initiated layout; leading companies like Pengding Holdings and Huashi Electronics are closely following; TTM mainly serves the Amazon supply chain, while Shennan Circuit focuses on the Mate supply chain; Guanghe and Fangzheng will gradually enter the sector to participate in competition. Shengyi Electronics, leveraging its CCL copper-clad laminate advantages, mainly undertakes Google and Mate-related orders; Pengding Holdings collaborates extensively with Taiwan MD, and Shennan Circuit works closely with Huawei. Currently, NVIDIA-related orders are mainly concentrated in Huadian, Shenghong Technology, and manufacturers in Thailand.
Q: How long can we expect the continuity of equipment procurement and capital expenditure resulting from HDI expansion?
A: Industry exchanges indicate that the rise of artificial intelligence is driving HDI development, with a technological trend shifting from ordinary boards to high-end technology upgrades. NVIDIA is developing technology to connect PCBs directly, bypassing packaging substrates, leading to reduced investment in packaging substrates and increased investment in HDI. HDI has extremely high requirements for PCB line width and spacing, with current Taiwanese and domestic companies like Jinxiang Electronics, Shengyi Electronics, and Huadian focusing on high-end HDI boards.
Q: If the CoWoS process penetration promotes the refinement of HDI circuits and raises the requirements for substrates, will this lead to a corresponding increase in equipment investment?
A: The CoWoS technology increases the demand for high-precision thick boards like sixth-level HDI, which have higher requirements for mechanical equipment. Currently, orders for lamination factories, internal pressure factories, electroplating factories, drilling factories, and laser drilling machines have been scheduled until mid-2026; for example, orders for German internal pressure equipment are scheduled until mid-2026, and orders for Xumo drilling machines are also scheduled until that time, indicating a supply-demand imbalance for equipment.
Q: What are the main process steps in PCB production currently? How is the value proportion of equipment in each step?
A: The main process steps in PCB production include internal lamination, exposure, drilling, electroplating, and inspection. For a typical board factory with an investment scale of 200 million yuan, the investment in internal lamination equipment is about 20 million; exposure equipment investment is about 10-20 million; mechanical drilling equipment has a large proportion, with 100 mechanical drilling machines varying in investment based on brand: domestic Dazhu, Weijia, and other second-tier brands require about 50-60 million, while German Xumo brands require about 80-90 million. Laser drilling equipment is priced at about 3.6-4.5 million, with the combined value proportion of mechanical and laser drilling exceeding 30%. Domestic equipment can replace electroplating lines, with a single production line investment of about 10-20 million. The proportion of inspection equipment is small, requiring only a small amount of configuration. Due to high investment thresholds, German Xumo drilling machines have seen a sharp decline in market share in ordinary board factories, but they still dominate in high-end HDI factories and high-end fields like NVIDIA and servers; domestic brands like Dazhu are gradually replacing imported equipment in through holes and simple depth control scenarios due to their payment term advantages.
Q: What are the characteristics of high-level HDI compared to ordinary PCBs or multilayer boards? What challenges do these characteristics bring in processing steps, and what additional equipment is required?
A: The core characteristics of high-level HDI include a high number of layers, dense hole spacing, small hole diameters, many layers, and high pressure requirements. The processing challenges mainly lie in: first, the high precision requirements for drilling, where mechanical drilling must strictly control depth; second, the high efficiency demand for drilling, where high-efficiency equipment is required for third-level and above HDI; third, stringent material requirements, necessitating the use of top-tier materials; fourth, complex process coordination, requiring collaboration of copper-clad laminates, PP, epoxy resins, and other materials, as well as high and low voltage process coordination.
Q: How do through holes, buried holes, and blind holes change due to the increased number of layers in HDI compared to ordinary boards? What equipment upgrades and configurations are needed?
A: Due to the increased number of layers in HDI, the processing methods for blind and buried holes differ from ordinary boards: blind and buried holes larger than 0.15mm use 30 laser drilling, first using UV to open copper windows, then burning holes with CO2; ordinary HDI has lower layer counts and does not require complex drilling processes. The exposure step uses LDI equipment, with mid-to-high-end equipment sufficient to meet demand. In terms of equipment configuration, a production line is typically configured at a 1:1 ratio of automated press lines to fiber machines, with specific quantities needing to be determined based on investment amounts, customer order changes, and comprehensive process technology.
Q: What changes will there be in the configuration ratios of mechanical drilling and laser drilling between ordinary HDI and advanced HDI?
A: The configuration ratios of mechanical drilling and laser drilling between ordinary HDI and advanced HDI are mainly influenced by hole diameter. For diameters above 0.15mm, ordinary HDI typically relies on mechanical drilling due to its lower cost and flexible maintenance, with a configuration ratio generally being 100 mechanical drills to 10-11 laser drills. Laser drilling is mainly used for blind and buried hole processing in advanced HDI, offering higher efficiency, but due to high equipment and maintenance costs, the configuration ratio is lower, adjusted based on customer orders, process technology, and investment amounts.
Q: What is the market price level of German Xumo drilling machines and Dazhu, Weijia single machines?
A: Currently, mainstream drilling machine brands include Xumo, Japanese Hitachi, Taiwanese Dongtai Precision Machinery, Dazhu, and Weijia. The price differences among Xumo’s various series are significant: the ordinary N6 to X6 series is priced at $128,000 to $135,000; the GDI series of the Spik MAS is priced at $150,000 to $160,000; the highest-end MXY series is priced at $380,000 to $400,000. Dazhu and Weijia have not surpassed Xumo in high-end technology, with insufficient stability; Da Liang’s controllable depth milling equipment is priced at about $200,000, competing with Xumo.
Q: Why is the technical barrier for blind milling, which is understood as dividing a board into different small pieces, so high?
A: Blind milling requires precise depth control to form a non-penetrating tunnel structure within the board, with technical difficulty significantly higher than that of washing through processes. The core barriers lie in: first, the need to detect copper layer distribution through probes to avoid washing through to layers below the target; second, due to the expansion and contraction of the board material, precise positioning must be achieved through CCD optical alignment compensation; third, high equipment configuration requirements necessitate three sets of linear motors and optical rulers with a precision of 0.5 microns, far exceeding the configuration level of ordinary drilling machines. Due to the complexity of the technology, the market has very few optical milling machines, creating a monopoly, and due to the irreplaceability of the technology, product prices are high.
Q: What is the current price range for mid-to-low-end products from graphite, approximately 900,000 to 1 million yuan, compared to similar products from Dazhu?
A: The historical price of Dazhu’s similar products has gradually decreased from 700,000 yuan to 650,000 yuan, 600,000 yuan, and the current price is about 500,000 to 580,000 yuan depending on quantity; another supplier, Weijia, offers similar products at about 30,000 yuan lower than Dazhu.
Q: What is the current order and production scheduling situation for graphite? Compared to the peak in 2021, is the current order demand stronger?
A: Sales in the three years post-pandemic have remained between 300-400 units, not exceeding 500 units; graphite’s annual production capacity is about 1,200 units.
Q: What is the current delivery cycle after order scheduling?
A: The original delivery cycle was 6 months for manufacturing, plus 1.5 months for sea transport and 0.5 months for customs clearance, totaling 8 months for customer delivery. Currently, due to an extended 2-month manufacturing time and additional delays due to war-related rerouting, the current delivery cycle has been extended to 10 months.
Q: What is the delivery cycle for Dazhu domestically?
A: Dazhu’s delivery cycle is about 3-4 months, mainly benefiting from local procurement advantages, based on annual forecasts and advance stockpiling with suppliers, bulk purchasing components like optical rulers, spindles, servo motors, etc., with components like spindles being readily available stock, requiring only manual assembly, and with multiple source suppliers ensuring delivery times significantly faster than German imported equipment.
Q: What is the current delivery cycle for German Xumo machinery and the specific scheduling situation for Mitsubishi and San Dian laser?
A: Currently, the delivery cycle for German Xumo machinery is about 10 months, while Mitsubishi’s scheduling plan has been extended to mid-2026, and San Dian laser’s scheduling plan has been extended to May.
Q: If the delivery schedule for Mitsubishi’s 30 drilling machines is pushed to May or June 2026, and the demand for laser drilling due to blind holes in HDI exceeds that of ordinary products, if Mitsubishi’s 30 drilling machines cannot be procured, can Dazhu or Tianzhun Technology’s laser drills be used as substitutes?
A: The main domestic laser drilling manufacturers include Dazhu, Shengxiong, Chaoyue, Guoren, and Tianzhun, among which Tianzhun has a technological gap with Dazhu. If Mitsubishi’s 30 drilling machines cannot be procured, companies typically prioritize outsourcing: there are about 200 Mitsubishi laser processing factories in the Pearl River Delta and Yangtze River Delta regions, and clients like Fangzheng and Shenghong only outsource to processing factories equipped with Mitsubishi laser equipment during tight order periods. When opting for Dazhu equipment as a fallback, issues such as unstable hole processing, high energy consumption, and deviations in laser drilling between different surfaces may arise. In contrast, Mitsubishi’s 30 laser drilling machines utilize an open laser head, dual surfaces, and one-to-one workstation design, achieving 30% higher output efficiency. Dazhu and Tianzhun equipment can only be used for low-end product replacements, but most clients still prefer outsourcing rather than using their equipment.
Q: In the future, copper-clad laminate materials may develop towards M9 direction, and Dazhu’s layout of ultra-fast laser drilling products aims to solve the processing challenges of CO2 drilling on these materials. What is the current situation?
A: Dazhu started with laser business and currently has a low market share. Its ultra-fast laser drilling products face bottlenecks in hole speed during medium layer material processing, currently only able to process 800-900 holes per second, unable to break through 1,000 holes, while similar products can achieve 1,700 holes/second. The development of laser heads requires a long time, and the market for this product has not yet opened, mainly applied in the mid-to-low-end HDI field.
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