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

Cailian Press March 30 (Reporter Fang Yanbo) “‘The explosion of the AI industry has brought the PCB sector a new round of a golden era, and as the key consumable for high-end circuit boards, PCB drill bits are becoming a crucial track in this transformation.’ Ms. Xu Meihua, Chairwoman of Xinxiang Huilian Electronic Technology Co., Ltd. (abbreviated as “Huilian Electronic”), said in an exclusive interview with Cailian Press.”

As a national-level specialized and innovative enterprise focusing on PCB drill bits and precision cutting tools, Huilian Electronic itself has also attracted the attention of the capital markets. Recently, a domestic leader in the hard metal and tools sector, Xinrui Co., Ltd. (688257.SH), has proposed to spend approximately RMB 700 million to acquire Huilian Electronic and its related companies, bringing this “little giant” with 20 years of deep cultivation in the PCB industry into a new stage of development.

Xu Meihua said that with Xinrui’s backing, Huilian Electronic has formally shifted from the “steady development” stage to the “high-quality accelerated development” stage. “Both Xinrui and Huilian Electronic are highly complementary. This cooperation not only brings us stronger capital 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 the capability of producing 100 million PCB drill bits per month within three years, and make Huilian the global number-one tier in the AI PCB drill bit field.”

AI is “drilled” into existence

In the AI industry’s compute power race, everything ultimately lands on countless millimeter-level PCB drill bits. As compute power evolves, the PCB drill bit industry is entering an unprecedented window of development opportunities.

Xu Meihua pointed out that, on the one hand, AI servers have significantly higher performance requirements for PCBs, pushing drill bit precision and compatibility requirements to new heights; on the other hand, AI PCBs generally use high-hardness substrates, and the machining difficulty is comparable to “drilling strengthened glass,” causing drill bit consumption to surge in a several-dozen-times, explosive growth pattern.

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

In Xu Meihua’s view, the development of the AI industry has completely opened up the market space for the PCB drill bit industry. From material upgrades to process innovation, from demand surges to technology upgrades, PCB drill bits are no longer just simple加工 consumables; they have become a core link that determines the efficiency and yield of AI hardware manufacturing. Whoever can master the core technology and mass production capability for high-end AI PCB drill bits will be able to seize the core voice in the precision cutting tool track for PCBs in the AI era. This is also the core reason why Huilian Electronic focuses on AI PCB drill bits and is fully committed to sprinting into the first-tier ranks of the industry.

Discussing the acquisition

From Xu Meihua’s introduction, Cailian Press reporters saw that Xinrui’s acquisition of Huilian Electronic is not a simple capital move, but rather a deep integration of upstream and downstream in the industrial chain and complementary advantages, becoming a milestone in Huilian Electronic’s development history.

Xu Meihua acknowledged that “Huilian Electronic has devoted itself to the PCB drill bit and precision cutting tool industry for many years and has built up solid capabilities in manufacturing processes, technical R&D, and customer channels. However, there is still room for further improvement in areas such as large-scale expansion of the enterprise, high-end raw material layout, and empowerment from the capital markets, and this is precisely Xinrui’s core advantage.”

As a leading company in China’s hard metal and tools sector, Xinrui Co., Ltd. has strong capabilities in upstream materials of hard metals, industrial chain integration, and capital operations. This gives both sides a solid foundation for industrial synergy.

“After the acquisition, Huilian Electronic has obtained more solid capital support and has been integrated into a more complete industrial chain ecosystem. Xinrui’s upstream material resources can help us solve the core problem of high-end raw material supply, and the capital markets platform also gives us a broader development horizon.” Xu Meihua said. This kind of synergy helps Huilian Electronic move away from the rolling development model that previously relied on its own accumulation, enabling it to take even bigger steps in high-end R&D and capacity planning.

According to the introduction, Huilian Electronic not only masters the complete set of core processes for PCB drill bits, but more remarkably, its key equipment such as sintering furnaces, grinding machines, and coating equipment has already been developed and manufactured in-house. This not only builds a deep technological moat for the company, but in the future it will become a “technology engine” to empower Xinrui’s existing hard metal and tooling businesses. After the two sides’ synergy, they are expected to form distinct advantages in reducing costs and increasing efficiency, breakthroughs in processes, and rapid response—achieving full-chain control of “materials + equipment + hard metal and tooling products,” realizing the industrial competitive advantage of “1+1>2.”

(Photos sourced from the interviewee) “The acquisition between Xinrui and Huilian Electronic has shown us signals of supply-chain upgrades.” A related person in charge at a leading PCB manufacturer said, “Previously, high-end PCB drill bits have faced a series of issues such as insufficient capacity, slower response times, and problems with product quality stability. After this acquisition, Xinrui’s upstream material advantages will help resolve the consistency issues of the drill bit base materials, while Huilian’s in-house developed equipment can rapidly respond to and adapt to downstream demand. The synergy of both sides’ combined strength is worth期待.”

Technical + in-house equipment builds core competitiveness

Being a target for acquisition by Xinrui, Huilian Electronic’s technical strength is the core confidence. As a national-level specialized and innovative enterprise, Huilian Electronic has long formed deep technical reserves in the PCB drill bit field. It is reported that Huilian Electronic has now achieved stable mass production of PCB drill bits with a 0.2mm micro diameter and an ultra-high length-to-diameter ratio of 40x or more, and its AI PCB drill bit technology is at the forefront of the industry.

In Xu Meihua’s view, talent support underpins technological breakthroughs. Huilian Electronic has a core technical team consisting of more than 30 senior professional engineers. The average work experience of team members in the PCB tooling industry exceeds 20 years, which is also the most fundamental support for the company’s continuous breakthroughs in high-end products. “Our team understands processes, understands equipment, and understands applications. You could say it is one of the most professional technical teams in the market that truly understands PCB tooling.” Xu Meihua said confidently.

At the same time, Huilian Electronic has also built competitive barriers that are difficult to replicate in the industry through in-house R&D and manufacturing of core production equipment.

Xu Meihua introduced that in 2018, Huilian Electronic successfully acquired Xiamen Tungsten Industry (Xiamen Jingu) PCB division and established Xiamen Honglalianchuang Tool Co., Ltd. This strategic integration deeply combined Jingu’s accumulation in PCB precision machining with Huilian’s capability for large-scale manufacturing. It enables Huilian to reach industry-leading levels in production efficiency, yield, and product quality for PCB drill bits.

Currently, Huilian Electronic has achieved independent R&D and batch manufacturing of key production equipment. Among them, the PCB drill bit step-difference grinding machines, the multi-station slotting grinding machines with the largest market usage—20 to 30 times the ratio, and the multi-station slotting grinding machines used to produce 50x length-to-diameter ratio high-end cutting tools have already entered mass production, significantly shortening the capacity ramp-up cycle. In terms of coating equipment, the diamond coating furnace for PCB cutting tools has been optimized and upgraded based on European high-end coating furnace equipment: capacity increased by 2 to 3 times, coating thickness uniformity ≤2um, reaching the world’s first-tier level, and multiple units have already been put into production. In addition, high-value-added equipment such as the in-house developed and manufactured 6MPa pressure sintering furnace, 4-axis CNC centerless grinding machine, and DG5 fully automatic step-difference machine have already been put into batch use.

Three-year plan, sprinting for the first-tier ranks

Leveraging the development opportunities brought by the acquisition, Huilian Electronic is currently accelerating the advancement of its capacity planning and building two major production bases in Xinxiang, Henan, and Xiamen. Xu Meihua introduced that the two bases have clear positioning and different focuses. The Xinxiang, Henan base leverages advantages in large-scale manufacturing and focuses on the production of mature products such as medium-large drill bits and conventional tooling, ensuring stable supply to the market. The Xiamen base is positioned around high-end R&D and intelligent manufacturing as the core, focusing on R&D and production of high-end PCB drill bits and AI PCB drill bits. Relying on the coastal location advantage, it stays close to clusters of high-end customers to achieve fast technology innovation deployment and efficient responses to market demand.

At present, the construction of factory buildings, equipment procurement, and installation and commissioning of production lines for the two bases are proceeding in an orderly manner, with some production lines already entering the trial production stage. “Including multi-station slotting grinding machines and knife grinders, we plan to add 260 units this year, add 400 units in 2027, and add 650 units in the third year. By fully leveraging the process advantages of our in-house developed grinding machines and diamond coating equipment, and improving automation levels, we will significantly increase the capacity of AI PCB drill bits and quickly respond to the urgent market demand for high-end 50x length-to-diameter ratio drill bits, thereby enabling the concentrated release of high-end capacity.” Xu Meihua said.

It is also worth mentioning that Huilian Electronic has formulated clear, stepped three-year capacity targets 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 the capability of 100 million units per month in 2028.

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

A massive amount of information and precise analysis—available on the Sina Finance app