Group 1 - The global server market is entering a new growth cycle starting in 2024, driven by the increasing demand for AI computing power, with an expected CAGR of 18.8% from 2024 to 2029 [2] - The PCB industry is recovering from a phase of adjustment due to weak consumer electronics and inventory cycles, with emerging demands from AI servers and high-performance infrastructure expected to drive growth from 2024 [2][3] - Domestic PCB manufacturers are actively expanding production and increasing capital expenditures, focusing on high-end products such as HDI and multi-layer boards [2][3] Group 2 - The global PCB equipment market is projected to reach 51 billion yuan in 2024, with a year-on-year growth of 9.0%, and a CAGR of 4.9% from 2020 to 2024 [3] - The demand for PCB equipment is significantly boosted by AI computing infrastructure, with the market expected to grow to 77.5 billion yuan by 2029, reflecting a CAGR of 8.7% from 2024 to 2029 [3] - Drilling, exposure, and testing equipment represent the highest value segments in the PCB equipment market, accounting for 20.75%, 16.99%, and 15.00% respectively in 2024 [3] Group 3 - The drilling equipment segment is expected to benefit from increased demand for high-end HDI, with both mechanical and laser drilling seeing growth due to the rising complexity of HDI designs [3] - The exposure equipment market is currently dominated by foreign brands, with low domestic penetration, particularly in LDI technology which is more suited for HDI [4] - The demand for plating equipment is increasing due to the higher number of plating cycles required for advanced HDI, alongside quality control pressures [5] Group 4 - Major equipment manufacturers are showing a clear upward trend, with expectations for accelerated performance in the future [6] - Key players in the drilling segment include Dazhu CNC (301200), while the exposure segment is led by Xinqi Micro (688630) and Tianzhun Technology (688003) [7] - The plating segment is highlighted by Dongwei Technology (688700), with Keg Precision (301338) noted for its role in the solder paste printing segment [7]

Core Viewpoint - The AI PCB industry is experiencing a boom, leading to increased demand and prices for manufacturing tools like PCB drill bits, significantly benefiting Ding Tai High-Tech, which reported record mid-year performance since its listing [1][2]. Financial Performance - In the first half of 2025, the company achieved operating revenue of 904 million yuan, a year-on-year increase of 26.90% [1]. - The net profit attributable to shareholders reached 160 million yuan, up 79.78% year-on-year, marking the best performance for the same period since the company went public [1]. - The net cash flow from operating activities was -29.4 million yuan, a decline of 124.36% year-on-year, primarily due to increased cash payments for goods and services [1]. Product Demand and Market Dynamics - The demand for high-end PCBs surged due to hardware upgrades in AI servers and high-speed switches, prompting the company to enhance its PCB tool products through an AI research team [1]. - The revenue share of tool products, including drill bits and milling cutters, increased from 75.40% in 2024 to 82.55% in the first half of 2025, with a gross margin of 38.67%, up 5.05 percentage points year-on-year [1]. - The company reported that the average price of drill bit products has been steadily increasing [1]. Supply Chain and Production Capacity - The quality of the PCB drilling process directly impacts the quality of PCB products, with AI PCBs requiring higher technical and quality standards for drill bits [2]. - There is a structural change in demand for micro-drills, high aspect ratio drill bits, and coated drill bits due to the increased requirements from high-layer AI server thick boards [2]. - The company is currently facing tight delivery schedules for drill bit products due to high demand and is reducing backup inventory to alleviate some delivery pressure [2]. Raw Material Costs - Ding Tai High-Tech's main products, including drill bits and milling cutters, primarily use tungsten as a raw material [2]. - Recent market data indicates a rapid increase in tungsten prices, with prices rising by 5,000 to 10,000 yuan per ton, and tungsten ore prices surpassing 200,000 yuan per ton, which directly raises the raw material costs for PCB drill bits [2]. Pricing Mechanism - The company has established a pricing mechanism with some major clients; however, specific arrangements regarding pricing methods and ranges have not been detailed [3]. - If the company cannot transfer the risk of significant raw material price increases to downstream customers, its performance may be adversely affected [3].

一、行情 2）PCB扩产持续，受益于AI算力基建需求。产业链方面： 二、事件：PCB上游迎来涨价潮 行业媒体PCB资讯8月15日消息，PCB行业上游材料市场波澜起伏。钨市场价格近期出现强劲上涨势头。与此同时，覆铜面板主要原材料铜、玻璃布等价格 也居高不下。上游金属与核心原材料价格的双重上涨，叠加行业竞争格局变化带来的影响，PCB上游之PCB钻针及覆铜板市场近期或将掀起涨价潮。 建滔、威利邦、宏瑞兴8月15日齐涨5—10元/张。 三、机构解读 1）AI-PCB的强劲需求带动了产业链，覆铜板龙头厂商的产能转向AI需求，AI需求叠加上游原材料涨价，覆铜板、钻针及铜箔相关材料涨价具有持续性。 随着英伟达GB200及ASIC的放量，AI服务器及交换机大量转向采用M8材料，未来有望向M9材料演进，技术升级带来价值量持续提升，由于海外覆铜板扩 产缓慢，大陆覆铜板龙头厂商有望积极受益。（国金证券） 8月18日，PCB板块再度迎来集体大涨。诺德股份、方正科技2连板，光洋股份、四创电子、亦东电子（20CM）、天承科技（20CM）、江南新材先后涨 停。中富电路、天津普林、景旺电子、博敏电子。 | PCB板 | | +3.44% | ...

Core Viewpoint - Shenghong Technology is expanding its investment scale and enhancing its core competitiveness through multi-channel financing, including a successful 1.9 billion yuan private placement and plans for a Hong Kong IPO, driven by significant funding needs and a strong market outlook for AI-related PCB products [1][3][4]. Financing and Investment Plans - Shenghong Technology's stock price has surged by 415% year-to-date, reaching 216.88 yuan as of August 12 [3]. - The company plans to use the proceeds from the 1.9 billion yuan private placement for capacity expansion and working capital [3][4]. - A total of up to 3 billion yuan is earmarked for fixed and intangible asset purchases, including new factory construction and equipment upgrades [4]. Market Position and Competitiveness - Shenghong Technology is a key supplier of PCBs for major clients like NVIDIA, Intel, Tesla, Microsoft, and Amazon, focusing on high-end products and new material applications [3][4]. - The company is deeply involved in AI computing and smart driving sectors, establishing technological barriers and leading market production technology by 2-3 years [4][9]. - The company has overseas bases in Thailand and Vietnam, with significant investments in AI-related projects totaling 3.22 billion yuan [4][9]. Financial Performance and Projections - Shenghong Technology's R&D expenses from 2022 to 2024 are projected to be 287 million yuan, 348 million yuan, and 450 million yuan, respectively, with a relatively low R&D expense ratio compared to peers [4]. - Revenue projections for 2025-2027 are 19.016 billion yuan, 24.753 billion yuan, and 28.991 billion yuan, with corresponding net profits of 4.513 billion yuan, 5.951 billion yuan, and 7.079 billion yuan [10]. Industry Trends and Competition - The global PCB market is expected to grow from 73.565 billion USD in 2024 to 94.661 billion USD by 2029, with a compound annual growth rate of 5.2% [8]. - The AI server-related HDI market is projected to grow at a compound annual growth rate of 16.3% from 2023 to 2028 [8]. - Competitors like Huadian Co. and Jingwang Electronics are also increasing their investments in AI-related PCB businesses, intensifying competition in the market [7][8].

Summary of Conference Call on PCB Industry and AI-Driven Developments Industry Overview - The conference call discusses the PCB (Printed Circuit Board) industry, particularly focusing on the impact of AI server demand on PCB materials and production processes [1][2][3]. Key Points and Arguments - **AI Server Demand and PCB Upgrades**: The demand for AI servers is driving upgrades in PCB materials, with the downstream value expected to exceed $70 billion in 2024. The storage segment of servers is projected to account for approximately 1/7 of this value, with China contributing over 55% [1][2]. - **Technological Requirements**: AI servers require PCBs with lower loss and higher transmission speeds, leading to a shift from traditional copper-clad laminates to MM8/MM9 materials. This change necessitates finer drill bits and increased laser drilling, which will enhance the value of drilling, exposure, and plating processes [1][3]. - **Market Size and Equipment Concentration**: The global market for PCB-specific equipment is estimated to be around $7 billion in 2024, with drilling equipment accounting for over 20% of this market. The concentration of drilling and exposure equipment is high, while detection equipment remains more generalized [5][16]. - **Drill Bit Demand and Supply**: The demand for drill bits is increasing due to the rise of high-layer and thick HDI (High-Density Interconnect) boards. The lifespan of micro-drills has decreased significantly, and prices for coated drill bits are approximately 30% higher than standard ones. Overall, AI-related drill bits are expected to see price increases of 30-60% [6][9]. - **Production Process Importance**: The PCB production process involves multiple stages, including lamination, drilling, plating, and exposure. The increase in multilayer boards correlates strongly with the need for investment in related equipment, particularly in drilling, which holds the highest value in the production process [7][8]. Additional Important Insights - **Investment Opportunities**: The drilling market presents several investment opportunities, particularly for companies that can quickly and reliably expand production capacity. Companies like Ding Tai and Zhong Wu are highlighted for their potential to benefit from AI-related orders [10][12]. - **Future Supply Gaps**: Despite ongoing expansions in the drill bit market, significant supply gaps are expected to persist in the short term, particularly in the drill bit segment, which may become the most constrained part of the equipment supply chain [9][11]. - **Trends in Drilling Equipment**: Mechanical drilling remains the dominant method for multilayer boards, but the complexity and precision required for AI-related applications are driving price increases for both mechanical and laser drilling equipment [13][14]. - **Laser Drilling Technology**: The application of laser drilling technology is expected to grow significantly, especially as the cost-effectiveness of laser drilling improves relative to mechanical drilling. This shift is anticipated to occur in specific diameter ranges where both technologies are applicable [14][15]. - **Domestic Market Dynamics**: The low domestic production rate of laser drilling equipment in China is gradually improving, with local brands beginning to replace imported products. This trend is expected to enhance competition and market growth in the coming years [17][18]. Conclusion - The PCB industry is undergoing significant transformation driven by AI technology, leading to increased demand for advanced materials and equipment. Companies that adapt to these changes and invest in new technologies are likely to see substantial growth and investment potential in the evolving market landscape [18].

Core Viewpoint - The PCB industry is entering a capital expenditure expansion cycle driven by global AI server demand, with a focus on investment opportunities in PCB equipment and consumables, particularly innovative equipment increments [2][4]. Group 1: Industry Overview - The demand for PCBs is primarily driven by innovation in downstream electronic products, which are closely tied to macroeconomic conditions [6]. - The previous cycle (2017-2023) was driven by 5G communication and new energy, with global PCB output increasing from $54.2 billion in 2016 to $81.7 billion in 2022, achieving a CAGR of 6.1% [8][15]. - The current cycle (2023 onwards) is characterized by AI server demand, with a projected 46% increase in global AI server shipments in 2024 [23][25]. Group 2: Capital Expenditure and Market Dynamics - The current PCB capital expenditure cycle began in Q4 2024 and is expected to last approximately two years, with potential for extension due to infrastructure demand [4][23]. - The PCB equipment market is experiencing a shift towards high-value products, with significant growth in demand for high-layer count, high-density, and high-speed PCBs [25][26]. - The global PCB equipment market is projected to reach $7.7 billion by 2025, with drilling, exposure, and plating accounting for 21%, 17%, and 7% of the market, respectively [5][44]. Group 3: Technological Innovations and Challenges - The MSAP process presents significant challenges in plating and drilling, leading to increased demand for advanced plating equipment [5][37]. - The introduction of new technologies such as CoWoP and mSAP is expected to enhance the value of PCB equipment, particularly in the drilling and plating segments [27][37]. - The PCB manufacturing process is evolving towards higher precision requirements, necessitating advancements in drilling and exposure technologies [38][39]. Group 4: Competitive Landscape - The PCB drilling and plating equipment market is characterized by oligopolistic competition, with domestic leaders capturing 50%-70% of the market share [4][35]. - Domestic manufacturers are increasingly able to compete with foreign counterparts, particularly in high-end PCB equipment, as foreign production capacity is limited [4][36]. - The global PCB drill bit market is projected to reach $940 million in 2024, with a CAGR of 4.4% from 2025 to 2031 [48][52].

Core Viewpoint - The company is experiencing growth opportunities in the PCB drill bit market due to the rising demand for high-value PCB products such as AI servers and high-speed network communications [3][22]. Company Overview - The company, Ding Tai High-Tech (301377.SZ), was established in 2013 and went public in 2022. It is a leading player in the global PCB drill bit market, with major clients including Pengding Holdings, Shenghong Technology, and Chongda Technology [5][4]. - The actual controllers of the company hold a combined 85.4% of the shares, indicating a high concentration of ownership [6]. Product Segmentation - The company primarily focuses on drill bits, milling cutters, and other specialized tools for PCB manufacturing, which historically contribute over 70% of its revenue [10][9]. - Functional film products, which include various protective films, are being developed as a second growth curve, with revenue from this segment reaching approximately 160 million yuan in 2024, a year-on-year increase of 72.8% [12][13]. Financial Performance - The company has maintained a growth trajectory, with revenue increasing from 700 million yuan in 2019 to 1.58 billion yuan in 2024, reflecting a compound annual growth rate (CAGR) of 17.7%. In Q1 2025, revenue grew by 27.2% year-on-year [22]. - The net profit attributable to the parent company increased from 70 million yuan in 2019 to 200 million yuan in 2024, with a CAGR of 22.7%. In Q1 2025, net profit grew by 87.7% year-on-year [24]. Market Position - The company holds a leading global market share in PCB drill bits, which increased from 19% in 2020 to 26.5% in 2023, benefiting from the global PCB industry's shift to China [26][27]. - The company has established a strong market position due to its self-researched equipment, which reduces costs and improves production efficiency [29]. Research and Development - The company maintains a high R&D intensity, with R&D expenses accounting for 6.9% of revenue in 2024 [34]. - The self-developed equipment has allowed the company to lower production costs to one-third of imported products and improve production efficiency by 15-20% [29]. Capital Expenditure and Cash Flow - The company has a history of high capital expenditures, resulting in a cumulative negative free cash flow of 700 million yuan since 2018 [38]. - Despite negative free cash flow, the company has engaged in significant equity financing and dividends, distributing 200 million yuan in 2024, with a dividend payout ratio of 86.8% [42]. Asset Structure - As of Q1 2025, the company had total assets of 3.615 billion yuan, with fixed assets representing the largest portion at 26.2% [46][48].

Financial Performance - In 2024, the company achieved a total revenue of CNY 1.58 billion, representing a year-on-year growth of 19.65% [1] - The net profit attributable to shareholders was CNY 227 million, up 3.45% year-on-year [1] - The first quarter of 2025 saw a revenue of CNY 423 million, a 27.21% increase compared to the previous year [2] - The net profit for the first quarter of 2025 reached CNY 72.58 million, marking a significant year-on-year growth of 78.51% [2] Product Line Performance - Tool products generated CNY 1.191 billion in revenue, accounting for 75.40% of total revenue, with a growth of 14.26% [2] - Grinding and polishing materials achieved CNY 151 million in revenue, reflecting a 30.70% increase [2] - Smart CNC equipment revenue was CNY 54.89 million, growing by 15.55% [2] - Functional film materials saw a revenue of CNY 155 million, with a remarkable growth of 72.84% [2] Profitability Factors - The significant profit increase in Q1 2025 was attributed to product structure optimization, internal efficiency improvements, and reduced expenses [3] Market and Production Capacity - The company currently has a domestic monthly production capacity of 85 million drill bits, which is fully utilized [6] - The Thai production base has begun to ramp up, with plans to adjust capacity based on market conditions [6] - Overseas revenue reached CNY 92.67 million in 2024, a 96.95% increase year-on-year [9] Strategic Initiatives - The establishment of a subsidiary in Germany aims to enhance technical collaboration and local service networks in Europe [10] - Future growth drivers include technological innovation, expanding downstream demand, global strategic layout, and smart manufacturing upgrades [12] Employee Incentives - The company has implemented an equity incentive plan to motivate employees and enhance competitiveness, with performance targets set for 2025 [12]