In Mortal Shell 2, Etching Needles are special items used to upgrade weapons and equipment. To obtain an Etching Needle, head to the Fallen Village. After entering, cross the bridge and go through the door. You'll see a special door with a narrow opening you can squeeze through. Once inside, open the chest to get the Etching Needle.
How to Get Etching Needles in Mortal Shell 2