CITIC Securities: Technology Iteration Promotes Liquid Cooling Penetration, Optimistic for Breakthroughs by Domestic Manufacturers

The Zhitong Finance App learned that CITIC Securities released a research report saying that since 2025, in the context of a sharp increase in AI server power consumption and chip power, liquid cooling solutions are gradually becoming the mainstream technology path for data centers with higher cooling efficiency and lower PUE. The bank predicts that the global liquid cooling market space will reach US$21.8 billion in 2027 as liquid cooling accelerates penetration superposition technology upgrades and ASP upgrades. Judging from the competitive pattern of the industry, the current liquid cooling industry chain is dominated by Taiwanese manufacturers. As chip manufacturers gradually participate in liquid cooling supply chain choices, domestic manufacturers have ushered in major opportunities. We are optimistic that domestic manufacturers will fully benefit from AIDC's liquid cooling demand, and recommend manufacturers with mass production capacity and overall solutions for liquid cooling core components.

CITIC Securities's main views are as follows:

The cooling system is a necessary means to overcome the increase in chip power consumption. Liquid cooling efficiency is higher than air cooling

Judging from the laws of physics, chip heating includes dynamic power consumption and static power. Under Denard's law of scaling, as the transistor gradually shrinks, the dynamic power consumption remains stable, but the leakage current effect is significantly amplified, and static power increases the power consumption of higher performance chips. In order to improve the service life of the chip, an external cooling system is required to maintain the normal operating condition of the chip. Overall, chip cooling technology can be divided into air cooling and liquid cooling. Among them, air cooling technology is more mature, but the heat dissipation efficiency is relatively low; liquid cooling technology is an emerging technology and can be divided into cold plate type, immersion type, etc., and the cooling efficiency is higher.

AIDC power density continues to increase, and liquid cooling opens up air-cooled heat dissipation bottlenecks.

1) Chip level: As the level of computing power continues to increase, the CPU/GPU single-chip TDP (thermal design power consumption) continues to grow. According to Nvidia's official website, liquid cooling technology can reduce annual energy consumption by 25% and rack space requirements by 75%;

2) Cabinet level: With the increase in computing power density, according to Vertiv, the power consumption of a single cabinet has gradually increased to more than 300kW, and air cooling technology can no longer meet the cooling requirements of the cabinet;

3) Computer room level: Liquid cooling technology can effectively improve the PUE level and reduce the overall energy consumption of AIDC. According to ZTE estimates, taking a data center with a scale of 10 MW as an example, comparing the liquid cooling solution (PUE 1.15) and the chilled water solution (PUE 1.35), it is expected that the increased initial infrastructure investment can be recovered in around 2.2 years.

Market space: Liquid cooling penetration rate+ASP is rising, and the market space is expected to reach US$21.8 billion in 2027.

1) Path switching: Compared with air cooling and liquid cooling, the main difference is the secondary side cooling system. According to data from Nvidia, TrendForce, etc., the value of cabinet cooling systems ordered with air cooling technology is about 20,000 US dollars, and the value of liquid cooling technology is about 82,000 US dollars, and the value of liquid cooling has increased significantly;

2) Technology iteration: Judging from the development of liquid cooling technology, the current cold plate technology has certain performance bottlenecks. In the future, microchannel cold plates and two-phase cold plates will further improve the heat dissipation capacity, driving up the value of liquid cooling. In the long run, chip-level microfluidic cooling is expected to become a revolutionary technology;

3) Market space: The bank calculates from the number of AI chips to the number of cabinets. Using 72 chips in a single NVL72 cabinet as a benchmark, it is estimated that global cabinet shipments will be about 246,000 units in 2027. Assuming that the penetration rate of AIDC liquid cooling is 75% in 2027, and the liquid cooling value increases slightly to 118,000 US dollars/unit, the bank predicts that the corresponding market space will reach 21.8 billion US dollars and will maintain a high growth rate.

Competitive landscape: Chip manufacturers are gradually participating in liquid cooling supply chain choices, and domestic manufacturers have ushered in huge opportunities.

1) Business logic: According to IDTechEx and TrendForce analysis, it is easier for server manufacturers to control decision-making power in the liquid cooling industry chain. Take the cold plate process as an example. Currently, Taiwanese manufacturers dominate the mainstream. With the iteration of liquid cooling technology, chip manufacturers will directly participate in the definition of liquid cooling, which is expected to liberalize commercial procurement relationships and significantly benefit domestic liquid cooling manufacturers;

2) Core components: Liquid cooling technology includes CDU, cold plates, manifolds, quick joints, coolant, etc. Currently, the middle and high-end market is dominated by Taiwanese manufacturers, and domestic manufacturers are gradually developing liquid cooling components;

3) Competitive trends: Judging from the development of liquid cooling of Verdi Technology, the company continues to acquire and acquire technical capabilities, cooperate with Nvidia and others to design overall AIDC solutions, and enhance its position in the industrial chain. Currently, domestic manufacturers are gradually introducing customer ecosystems such as Nvidia and Intel. They are optimistic that domestic manufacturers will gradually have manufacturing capabilities throughout the entire industry chain, and are expected to provide overall solutions for liquid cooling.

Risk factors:

The development of the AI industry falls short of expectations; the capital expenditure of domestic and foreign Internet giants falls short of expectations; the progress of liquid cooling technology in domestic and foreign companies falls short of expectations; competition in the liquid cooling industry intensifies; the risk of iterative technology solutions; the cost of liquid cooling technology falls short of expectations; and geopolitical and overseas policy risks.