Shares of Tiangong International (00826) are trading notably higher, gaining over 5% during the session.

At the latest update, the stock was up 4.96% to HK$3.81, with a turnover exceeding HK$72.8 million.

The upward movement follows a company announcement made on July 7th.

The firm's indirectly owned subsidiary, Jiangsu Tiangong Cemented Carbide Technology Co., Ltd., has initiated a construction project aimed at expanding production.

This project targets an increased annual output of 300 tons of ultra-fine grain special bar material used for PCB cutting tools.

In light of the surge in demand for PCBs, driven by AI computing infrastructure and server upgrades, the company's board believes this initiative will help solidify its supply chain advantages in high-end and cutting-edge downstream sectors ahead of schedule.

This strategic move is expected to enhance the group's overall profitability.

Analysts from Huayuan Securities have provided commentary on the company's direction.

They note that Tiangong International recently indicated during an investor open day that it will prioritize the development of micro-hole processing tools and bar stock products for precision machining applications like PCBs.

The brokerage's view is that the robust demand for AI servers and high-end PCBs is likely to sustain a favorable market climate for the PCB micro-drill industry.

Leveraging its strengths in the cemented carbide industry chain, Tiangong International is well-positioned to make this strategic entry.

This expansion represents a significant shift for the company, moving from its traditional focus on tool and die steel towards the higher value-added segment of precision tools.