Huilian Electronics Chairman Xu Meihua: The acquisition of Xinrui Corporation is a strategic opportunity to enter the top tier of AI PCB drilling needle manufacturers globally within three years | Financial Interview

Ask AI · How can Xinxing Shares’ acquisition help Huilian Electronics break through high-end PCB drill-bit capacity bottlenecks?

Caixin Media (3/30) News (Reporter Fang Yanbo)“The surge in the AI industry has ushered in a golden era for the PCB sector. As PCB drill bits—key consumables for high-end circuit boards—are becoming a critical track in this transformation.” Ms. Xu Meihua, Chairman of Xinxiang Huilian Electronic Technology Co., Ltd. (abbreviated as “Huilian Electronics”), said in an exclusive interview with Caixin Media.

As a national-level “specialized, refined, distinctive, and innovative” enterprise focused on PCB drill bits and precision cutting tools, Huilian Electronics itself has also drawn attention from the capital markets. Recently, domestic leaders in hard metal and tools—Xinxing Shares (688257.SH)—plans to invest approximately RMB 700 million to acquire Huilian Electronics and its affiliated companies, bringing this “little giant” that has been deeply engaged in the PCB industry for 20 years into a new development stage.

Xu Meihua said that with Xinxing Shares’ backing, Huilian Electronics has officially shifted from a “steady development” mode to a “high-quality accelerated development” stage. “Xinxing Shares and Huilian Electronics are highly complementary to each other. This cooperation not only brings us stronger financial strength and a broader platform, but also gives us more confidence in high-end product R&D, capacity expansion, and market development. We strive to reach a capacity of 100 million PCB drill bits per month within three years, and make Huilian the global No. 1 camp in the AI PCB drill-bit field.”

AI is “drilled” out

The AI industry’s compute race ultimately lands on these micron-level PCB drill bits. As compute technology evolves, the PCB drill-bit industry is entering an unprecedented period of development opportunities.

Xu Meihua said bluntly that on one hand, AI servers have sharply higher requirements for PCB performance, pushing drill-bit accuracy and compatibility requirements to a new level; on the other hand, AI PCBs commonly use high-hardness substrate materials, making the machining difficulty comparable to “drilling reinforced glass,” with drill-bit consumption exploding by dozens of times.

More importantly, the AI industry’s demand for ultra-small diameter and ultra-high aspect-ratio drill bits has become the mainstream in the industry. Drill bits with a 0.2mm micro-diameter and an aspect ratio of 40x or more have become standard for high-end AI PCBs. This technical requirement significantly raises the technology barriers in the PCB drill-bit industry, and also allows companies with high-end drill-bit R&D and mass-production capabilities to stand on the industry’s growth front.

In Xu Meihua’s view, the development of the AI industry has completely opened up the market space for the PCB drill-bit sector. From material upgrades to process innovations, and from demand surges to technology upgrades, PCB drill bits are no longer just simple machining consumables, but have become a core link that determines efficiency and yield in AI hardware manufacturing. Whoever can master the core technology and mass-production capability of high-end AI PCB drill bits will gain the core voice right in the precision cutting-tool track of the AI era. This is also the key reason Huilian Electronics focuses on AI PCB drill bits and is fully striving to enter the industry’s first-tier ranks.

On the acquisition

From Xu Meihua’s introduction, Caixin Media reporters saw that this acquisition by Xinxing Shares of Huilian Electronics is not a simple capital move, but rather a deep integration and complementary advantages across the upstream and downstream of the industrial chain—serving as a milestone in Huilian Electronics’ development history.

Xu Meihua acknowledged that “Huilian Electronics has been deeply involved in the PCB drill bits and precision cutting tools industry for many years and has built solid know-how in manufacturing processes, technology R&D, and customer channels. However, there is still room for further improvement in areas such as large-scale expansion of the company, layout of high-end raw materials, and enablement from the capital markets—this is precisely the core advantage of Xinxing Shares.”

As a leading company in the hard metal and tools sector in China, Xinxing Shares has strong capabilities in upstream materials of hard metal, integration of the industrial chain, capital operations, and more—providing a strong foundation for industrial synergy between the two parties.

“After the acquisition, Huilian Electronics received more solid capital support and was integrated into a more complete industrial-chain system. Xinxing Shares’ upstream material resources can help us solve the core issue of high-end raw material supply, and its capital-market platform can also broaden our development horizons.” Xu Meihua said. This kind of synergy allows Huilian Electronics to escape the previous rolling development model that relied on its own accumulation, enabling it to take bigger steps in high-end R&D and capacity layout.

According to the introduction, Huilian Electronics not only masters the full set of core processes for PCB drill bits; more notably, Huilian Electronics’ key equipment—such as its sintering furnaces, grinders, and coating equipment—has been developed and manufactured in-house. This not only forms a deep technical moat, but in the future it will also become a “technology engine” that empowers Xinxing Shares’ existing hard metal and tool businesses. After the parties synergize, they are expected to form distinct advantages in cost reduction and efficiency improvement, process breakthroughs, and rapid response—realizing end-to-end control of “materials + equipment + hard metal and tool products,” and achieving the industrial competitive advantage of “1+1>2.”

(Image source: provided by the interviewee) “The acquisition between Xinxing Shares and Huilian Electronics shows us signals of supply-chain upgrading.” A relevant person in charge at a leading PCB manufacturer said, “Previously, high-end PCB drill bits have consistently faced a series of issues such as insufficient capacity, slower response, and product-quality stability. After this acquisition, Xinxing’s upstream material advantages will help address the consistency problem of drill-bit substrates. Meanwhile, Huilian’s in-house developed equipment can quickly respond to and adapt to downstream demand. The combined force formed by both sides is worth looking forward to.”

Technical capability + in-house manufactured equipment builds core competitiveness

For Huilian Electronics to become an acquisition target for Xinxing Shares, its strong technical hard power is the core backing. As a national-level specialized, refined, distinctive, and innovative enterprise, Huilian Electronics has already built deep technical accumulation in the PCB drill-bit field. It is understood that Huilian Electronics has already achieved stable mass production of PCB drill bits with a 0.2mm micro-diameter and an ultra-high aspect ratio of 40x and above, and its AI PCB drill-bit technology is at the forefront of the industry.

In Xu Meihua’s view, behind technological breakthroughs is talent support. Huilian Electronics has a core technical team consisting of more than 30 professional senior engineers. The team members have an average of over 20 years of work experience in the PCB tooling industry, which is the most fundamental underpinning for the company’s continuous breakthrough in high-end products. “Our team understands processes, equipment, and applications. In other words, we can say that it is one of the most professional technical teams in the market and one of those who truly understands PCB tooling the best.” Xu Meihua said confidently.

At the same time, Huilian Electronics has also built an unreplicable competitive barrier in the industry by developing and manufacturing core production equipment in-house.

Xu Meihua introduced that in 2018, Huilian Electronics successfully acquired the PCB business division of Xiamen Tungsten Industry (Xiamen Jingu) and established Xiamen Honglu Lianchuang Tools Co., Ltd. This strategic integration deeply combined Jingu’s accumulation in PCB precision processing with Huilian’s large-scale manufacturing capability, enabling Huilian to reach industry-leading levels in production efficiency, first-pass yield, and product quality for PCB drill bits.

At present, Huilian Electronics has achieved independent R&D and batch manufacturing of key production equipment. Among them, the PCB drill-bit step grinding machines, the multi-station slotting and grinding machines with the highest market usage (20-30 times the typical usage), and multi-station slotting grinding machines used to produce 50x aspect-ratio high-end tools are now all in mass production, significantly shortening the capacity ramp-up cycle. In terms of coating equipment, the diamond coating furnace for PCB tools has been upgraded through optimization based on high-end coating furnace equipment in Europe: capacity has increased by 2-3 times, coating thickness uniformity is ≤2um, reaching the world’s first-echelon level, and multiple units have already been put into operation. In addition, high-value-added equipment developed and manufactured in-house—such as a 6MPa pressure sintering furnace, a 4-axis CNC centerless grinder, and a DG5 fully automatic step machine—has also been put into batch use.

Three-year plan, sprinting for the first tier

Leveraging the development opportunities brought by the acquisition, Huilian Electronics is currently accelerating its capacity layout and building two major production bases in Henan Xinxiang and Xiamen. Xu Meihua said that the two bases have clear positioning and different focuses. The Henan Xinxiang base leverages advantages in large-scale manufacturing, focusing on production of mature products such as medium-to-large drill bits and conventional tooling, to ensure stable supply to the market. The Xiamen base is positioned around high-end R&D and intelligent manufacturing as its core, with a focus on R&D and production of high-end PCB drill bits and AI PCB drill bits. Benefiting from its coastal location, it is closer to clusters of high-end customers, enabling faster commercialization of technological innovations and efficient responsiveness to market demand.

At present, the construction of facilities, equipment procurement, and production-line installation and commissioning for the two bases are proceeding in an orderly manner, and some production lines have entered the trial production stage. “Including multi-station slotting and grinding machines and grinders, we plan to add 260 units this year, 400 units in 2027, and 650 units in the third year. By fully leveraging the process advantages of our in-house developed grinders and diamond coating equipment and increasing the level of automation, we will significantly enhance the capacity of AI PCB drill bits, quickly respond to the urgent market demand for 50x aspect-ratio high-end drill bits, and achieve a concentrated release of high-end capacity.” Xu Meihua said.

Worth noting is that Huilian Electronics has also set a clear three-year, stepwise capacity target for PCB drill bits. Xu Meihua said the company plans to achieve PCB drill-bit capacity of 20 million units per month by the end of 2026, increase it to 50 million units per month in 2027, and reach a capacity of 100 million units per month in 2028.

“As the above capacity targets are gradually achieved, Huilian Electronics will meet the goal of entering the global first tier in the PCB drill-bit field. Not only will it be able to meet demand from high-end domestic customers, it will further open up the international market.” Xu Meihua added.

(Caixin Media reporter Fang Yanbo)