According to a research report from China Galaxy Securities, the rise of AIGC has led to a substantial increase in the heat flux density of high-power chips. As traditional air cooling approaches its physical limits, liquid cooling has become the preferred solution for managing heat in high-power chips. Single-phase cold plate liquid cooling accounts for over 90% of applications in liquid-cooled data centers, representing the most mature technology. Currently, the domestic substitution of fluorinated refrigerants is progressing in two main categories: the first is the replacement with electronic fluorinated liquids (for liquid cooling), and the second is the substitution of traditional refrigerants (HFCs/HFOs). The competitive landscape continues to improve, benefiting leading companies in the industrial chain. Additionally, the rapid growth in production and sales of new energy vehicles is driving strong demand for battery cooling plates. The key points from China Galaxy Securities are as follows:
The expansion of AIGC is driving the adoption of high-power chips, making full liquid cooling the mainstream solution. With the emergence of AIGC, the heat flux density of high-power chips has increased significantly. Traditional air cooling is nearing its physical limits, making liquid cooling the preferred method for thermal management in high-power chips. Nvidia's Hopper chip utilizes a liquid cooling plate (MCCP)/air cooling solution. For the Blackwell chip, the GB300 employs a fully liquid-cooled independent cold plate. The next-generation Vera Rubin chip will adopt full liquid cooling. Nvidia's current overseas cooling suppliers include AVC, Auras Technology, Cooler Master, Delta Electronics, and Vertiv. The substantial increase in cold plate usage will drive demand for upstream raw materials (such as high-purity copper and aluminum alloys), precision processing equipment, and sealing materials. Midstream manufacturers, including Cooler Master, Vertiv, Envicool, Gaolan Technology, Shenling Environment, and Tongfei, are expected to benefit.
High-power data centers primarily use single-phase liquid cooling. The power of AI server racks in data centers is increasing from 12kW to 40kW, 120kW, and 240kW, with training cluster power reaching 130MW. As heat flux density in data centers rises significantly, air cooling can no longer meet cooling demands, leading to the predominant use of liquid cooling. Currently, single-phase cold plate liquid cooling holds more than 90% of the market share in liquid-cooled data centers and is the most technologically mature. Common coolants for cold plates include ethylene glycol solutions, propylene glycol solutions, and deionized water. According to the "Telecom Operator Liquid Cooling Technology White Paper - 2023" jointly released by China Mobile, China Telecom, and China Unicom, Huawei and Inspur primarily use a 25% ethylene glycol solution, while Inspur Information and H3C mainly use a 25% propylene glycol solution. In 2024, Inspur Information accounted for 5.5% of global sales in data center liquid cooling infrastructure, ranking among the top five worldwide. Furthermore, it held a 17.5% share in the single-phase cold plate segment, ranking first globally. Deionized water offers excellent heat transfer performance, ultra-low conductivity, mature preparation processes, and is non-toxic and safe, making it a viable alternative coolant. Among the three coolants, ethylene glycol shares an industrial chain with automotive antifreeze, benefiting from a mature supply chain and lower costs, which advantages related refrigerant companies.
The competitive landscape for fluorinated refrigerants is improving, with significant potential for domestic substitution. Following 3M's exit from the per- and polyfluoroalkyl substances (PFAS) refrigerant business, domestic substitution is now occurring in two main types: first, replacement with electronic fluorinated liquids (for liquid cooling), with major listed companies including Juhua Group, Capchem, Dongyangguang, and Haohua Technology. Second, substitution of traditional refrigerants (HFCs/HFOs), with key listed players such as Juhua Group, Sanmei, and Yonghe. Juhua Group is the largest domestic refrigerant leader, projecting net profit attributable to shareholders of 3.54-3.94 billion yuan for 2025, a year-on-year increase of 80%-101%. The third-generation fluorinated refrigerants (HFCs) continue to be managed under production quotas, leading to an optimized competitive environment that benefits leading firms in the supply chain.
Rapid growth in new energy vehicle production and sales is fueling strong demand for battery cooling plates. According to Nabtian's prospectus, the global market size for power battery cooling plates is expected to reach 14.5 billion yuan by 2025, with the domestic market reaching 9.6 billion yuan. Growth in energy storage batteries is also boosting demand for liquid cooling. By 2025, China's thermal management market for energy storage batteries is projected to reach 16.4 billion yuan, with the liquid cooling segment expected to account for 7.4 billion yuan. Leading domestic component suppliers such as Nabtian, Sanhua Intelligent Controls, and Yinlun are poised to benefit.
Risk factors include potential shortfalls in demand and mass production of high-end chips, lower-than-expected installations of new energy power batteries, and slower-than-anticipated development of AI.
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