A rotary tool such as a helix drill and an end mill for example, is manufactured by forming a blank by an extrusion process, and then sintering the blank. During the extrusion, a mixture is passed through a die which provides a cylindrical shape to the outer peripheral surface of the mixture. A plurality of jaws are disposed downstream of the die for conducting the mixture. Each jaw includes a helical ridge for engaging the outer surface of the extrudate to cause a helical groove to be formed therein which constitutes a chip flute in the tool. During the extrusion, the jaws are moved away from the mixture to terminate formation of the chip groove, whereby a shank portion of the tool is formed.