The AI Chip Shortage Nobody Named: Tungsten Drill Bits
The bottleneck in the AI boom is not always a GPU. Sometimes it is a drill bit thinner than a needle. On November 5, Nikkei Asia reported that China’s export controls on tungsten — the ultra-hard metal used in carbide micro-drills — are disrupting supplies of the tools that punch microscopic holes in printed circuit boards and chip substrates. Without those holes, high-density boards for AI servers do not get built. Prices for the bits have surged, and some board makers are already shifting orders toward Chinese suppliers who still have feedstock.
A metal most people never hear about
China accounts for roughly four-fifths of global tungsten mine output. Since early 2025 Beijing has required licences for ammonium paratungstate, tungsten oxides, tungsten carbide and related products. Shipments of controlled items have fallen sharply; Japanese imports of several tungsten products were down more than 60 percent in one recent comparison with pre-control levels. Western APT prices have at times traded at nearly four times Chinese domestic levels, splitting the market into two price worlds.
That matters for AI hardware because modern server and networking boards pack more layers, harder materials and tighter hole pitches. Ultrafine-grain carbide rods are what let drill makers keep accuracy and tool life. When Japanese, Taiwanese, US and European refiners cannot get enough high-grade powder, the shortage travels downstream: fewer rods, scarcer bits, longer lead times, higher quotes — and, eventually, slower board capacity for the same AI racks everyone is racing to ship.
Who gains, who scrambles
PCB managers told Nikkei that when traditional partners in Japan, Taiwan and Europe ran short, some factories turned to Chinese drill or carbide suppliers. That is exactly the leverage export licensing creates: not a total ban, but a gate that favours those inside the wall. Vietnam holds the world’s second-largest tungsten reserves, concentrated around Thai Nguyen, and other countries are trying to restart mines and recycling. None of that arrives overnight. Qualifying a new powder or bit supplier for precision drilling can take many months.
Defence demand for tungsten is rising at the same time, competing with semiconductors, photovoltaics and cutting tools. The practical lesson for Asian tech supply chains is uncomfortable but clear. The glamorous end of AI — models, chips, data centres — still rests on obscure industrial inputs whose politics can change faster than a fab can retool. Tungsten is the latest reminder that “critical minerals” is not a slogan. It is a purchase order that may not clear.