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High-end drill bit demand outstrips supply, Kaiwei eyes growth through 2027

From Liberty Times · () Chinese

Translated from Chinese, summarized and contextualized by DistantNews.

At a glance

News Named sources New plan
  • PCB drill bit manufacturer Kaiwei (5498) expects continued growth through next year due to strong demand for high-end drill bits driven by AI.
  • The company plans to increase its monthly production capacity from 25 million units to 40 million by next year.
  • Rising costs for materials like tungsten, coupled with supply shortages, are expected to drive up drill bit prices.

Taiwanese PCB drill bit manufacturer Kaiwei (5498) anticipates sustained operational growth into 2027, fueled by a significant demand surge for high-end drill bits essential for AI applications. The company's president, Chu Tsung-wei, stated at a recent investor conference that the market for these specialized components has been undersupplied since last year.

high-end drill bits have been in short supply since last year

— Chu Tsung-weiKaiwei's president explained the market situation driving the company's expansion.

Despite expansion efforts by the top five global drill bit manufacturers, the supply of high-end drill bits remains far below market needs. Kaiwei has responded by initiating a production expansion, aiming to boost its monthly capacity from the current 25 million units to 40 million by next year. This increase, combined with rising material costs such as tungsten, is expected to lead to continued price hikes for drill bits.

The demand is primarily driven by emerging applications like AI servers and optical communications, which require advanced PCBs such as multi-layer boards, HDI boards, and substrate boards. These advanced boards, in turn, necessitate high-performance drill bits. Chu noted that drill bits are not standardized products and must be customized for different PCB designs, further complicating supply chain dynamics.

the expansion speed of the top five drill bit manufacturers cannot keep up with customer demand

— Chu Tsung-weiChu highlighted the supply-demand imbalance in the specialized drill bit market.

Kaiwei's expansion plan will see its monthly production capacity grow from approximately 20 million units in the first half of this year to 25 million in the second half, and then to 40 million next year. This ramp-up is expected to drive sequential growth month-over-month and quarter-over-quarter, with the company targeting a historical revenue high for this year and projecting an even stronger performance in 2027.

drill bits are not standard specification products and need to be adapted to different PCB board designs

— Chu Tsung-weiHe explained the complexity of drill bit production and customization.
DistantNews Editorial

Originally published by Liberty Times in Chinese. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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