Soochow Securities released a research report stating that starting from the fourth quarter of 2024, high capital expenditures from PCB manufacturers are driving profit realization for equipment suppliers. Drill bits with a 40:1 aspect ratio represent the segment with the greatest potential upside, and monitoring the progress of related companies is advised. AI server upgrades are also fueling demand for high-precision Class III solder paste printing equipment. Core segments of the industrial chain are experiencing opportunities for both volume and price increases. The main views from Soochow Securities are as follows:
A turning point in performance for PCB manufacturers and equipment suppliers has emerged since Q4 2024. High capital expenditure from manufacturers corresponds to high revenue for equipment firms. Taking NVIDIA's primary suppliers, Shengyi Technology and Wus Printed Circuit, as examples, capital expenditure has continued to rise significantly since Q4 2024. The strong performance realization by PCB equipment and consumables companies is primarily due to robust capital expenditure and high utilization rates among downstream PCB manufacturers.
The Rubin platform creates incremental PCB demand. Firstly, compared to the Rubin 144, the Rubin 144CPX version incorporates 144 additional CPX chips, all of which require mounting on PCBs. Furthermore, the Rubin 144CPX platform introduces an orthogonal midplane, replacing copper cable traces for connecting GPUs and CPX chips. Secondly, the Rubin Ultra platform configuration involves significant changes. A single rack is divided into four pods, each containing 18 Compute Trays and 6 Switch Trays. These are vertically arranged and connected front-to-back via orthogonal backplanes. The Rubin Ultra platform adds four orthogonal backplanes per rack.
The M9 cloth solution drives demand for ultrafast laser drilling. Compared to CO2 laser drilling, ultrafast laser drilling offers two key advantages: stronger material compatibility, enabling processing of high-melting-point materials, and finer microvia processing. The potential adoption of specific cloth as an interlayer material in orthogonal backplanes and midplanes is expected to spur demand for ultrafast laser drilling. The leading drilling equipment manufacturer, Han's CNC, is recommended.
Drill bits with a 40:1 aspect ratio represent the segment with the greatest potential upside, and monitoring company progress is advised. PCBs for the Rubin series generally exceed 6.5mm in thickness, marking the first use of drill bits with aspect ratios above 40:1. The increase in drill bit aspect ratio expands the market potential through both volume and price increases. The report anticipates a substantial market for 40:1 aspect ratio drill bits, with future competition among drill bit manufacturers focusing on this segment. Companies achieving mass production first are expected to fully realize profits. The leading drill bit manufacturer, D-Tech, is recommended, and attention is also advised on China Tungsten.
AI infrastructure construction fuels demand for Class III solder paste printing equipment. Current AI computing server PCBs require significantly higher precision for solder paste printing, making Class III equipment essential. Compared to Class I and II equipment, Class III equipment commands higher selling prices and gross margins. The leading solder paste printing equipment manufacturer, GKG, is recommended.
Risk warnings include macroeconomic volatility, slower-than-expected progress in PCB processes, and weaker-than-expected demand for computing servers.