CITIC SEC released a research report stating that since 2025, amid significant increases in AI server power consumption and chip wattage, liquid cooling solutions—with their superior heat dissipation efficiency and lower Power Usage Effectiveness (PUE)—are emerging as the mainstream technical pathway for energy conservation in data centers. The firm predicts that, with accelerated adoption and technological upgrades driving higher Average Selling Prices (ASPs), the global liquid cooling market will reach $21.8 billion by 2027.
Currently, the liquid cooling supply chain is dominated by Taiwanese manufacturers. However, as chipmakers increasingly engage in liquid cooling supply chain decisions, domestic manufacturers are presented with substantial opportunities. CITIC SEC highlights the potential for domestic players to benefit from the surge in AI data center (AIDC) liquid cooling demand, particularly those with mass-production capabilities for core liquid cooling components and integrated solutions. Key insights include:
1. **Cooling Systems as a Necessity for Rising Chip Power**: - Chip heat generation comprises dynamic and static power. While Dennard scaling has stabilized dynamic power, leakage current effects have amplified static power, necessitating external cooling systems to maintain chip performance. - Air cooling, though mature, has lower efficiency. Liquid cooling—including cold plate and immersion technologies—offers superior cooling performance.
2. **Liquid Cooling Overcoming Air Cooling Bottlenecks in AIDC**: - **Chip Level**: CPUs/GPUs exhibit rising Thermal Design Power (TDP). NVIDIA reports liquid cooling reduces annual energy use by 25% and cuts rack space needs by 75%. - **Rack Level**: Power demands per rack now exceed 300kW, surpassing air cooling’s capacity (Vertiv data). - **Data Center Level**: Liquid cooling improves PUE. ZTE estimates a 10MW data center using liquid cooling (PUE 1.15) recoups initial infrastructure costs in ~2.2 years versus chilled-water systems (PUE 1.35).
3. **Market Potential**: - **Value Shift**: Liquid cooling’s secondary cooling systems raise per-rack costs from $20k (air) to $82k (NVIDIA/TrendForce data). - **Tech Evolution**: Microchannel/two-phase cold plates will enhance performance, while chip-scale microfluidic cooling may revolutionize the field. - **Forecast**: Assuming 75% AIDC penetration by 2027 and $118k/rack ASPs, the market could hit $21.8 billion (246k racks globally, based on NVIDIA’s NVL72 standard).
4. **Competitive Landscape**: - **Opportunities for Domestic Players**: Server makers currently lead supply chain decisions, but chipmakers’ involvement (e.g., in liquid cooling specifications) may open procurement to domestic manufacturers. - **Components**: Taiwanese firms dominate mid-to-high-end markets (CDUs, cold plates, manifolds), though domestic players are gaining traction. - **Trends**: Companies like Vertiv collaborate with NVIDIA on AIDC solutions, while domestic manufacturers integrate into ecosystems (e.g., NVIDIA, Intel), advancing full-supply-chain capabilities.
**Risks**: Slower-than-expected AI sector growth; subdued capex by global tech giants; lagging liquid cooling R&D; intensifying competition; cost-reduction delays; geopolitical/policy uncertainties.
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