CITIC Securities: AI chip architecture reform promotes rapid growth in liquid cooling market space, focusing on structured investment opportunities
The Zhitong Finance App learned that CITIC Securities released a research report that against the backdrop of AI computing power demand and chip power consumption continuing to rise, the TDP of AI acceleration chips has broken through the physical limit of air-cooled heat dissipation, and major global cloud service providers (CSPs) are clearly setting liquid cooling as the default standard for next-generation architectures. This structural transformation will drive the rapid growth of the liquid cooling market space. Domestic manufacturers have achieved a full industrial chain layout. They are breaking down barriers of trust through multiple channels such as going overseas for leading Taiwanese founders or directly obtaining RVL certification from chip giants, and are rapidly seizing the market driven by the expansion of domestic cloud service provider (CSP) computing power infrastructure. As demand for heat dissipation evolves to ultra-high heat density, the focus should be on the technological leap from apparent heat exchange to latent phase change heat (such as dual-phase cold plates and immersion liquid cooling), as well as structural investment opportunities brought about by novel cooling media such as fluorinated liquids and chip-level microfluidic cooling.
CITIC Securities's main views are as follows:
AI computing power demand and rising chip power consumption drive liquid cooling as a definite trend
As Moore's Law slows down, increasing chip power density in exchange for performance growth has become a trend, and the TDP of AI acceleration chips has broken through the limits of air-cooled heat dissipation. Major global cloud service providers (CSPs) have clearly switched to liquid cooling solutions in their next-generation architectures, and liquid cooling is becoming the default standard for AI infrastructure. This intergenerational shift from air cooling to liquid cooling provides long-term structural growth impetus for the liquid cooling supply chain.
The liquid cooling industry is in the early stages of rapid growth and has great potential for growth
The CITIC Securities Research Division's forward-looking team expects the total capital expenditure of the four largest CSPs in North America to increase sharply by 52% year-on-year to US$383.6 billion in 2025, providing a solid downstream demand guarantee for the development of the liquid cooling industry. Furthermore, TrendForce predicts that the liquid cooling penetration rate of global AI data centers will rapidly rise from 14% in 2024 to 47% in 2026. The bank predicts that by 2027, the global AI server liquid cooling market space is expected to reach 21.8 billion US dollars, and its growth rate far exceeds the growth rate of the server industry.
Currently, the global liquid cooling supply chain is mainly dominated by Taiwanese manufacturers with long-term technology accumulation and certification advantages
With decades of cooperation with chip giants such as Nvidia, Taiwanese leaders have formed a remarkable ecological closed loop in the fields of liquid cooling plates and CDUs. Since liquid cooling systems involve extremely valuable chip security, cloud vendors have a high level of complexity in certifying their suppliers, forming an extremely high barrier of trust. Currently, Nvidia holds the entry threshold for core hardware through its Official Recommended Supplier List (RVL). Taiwanese manufacturers have further consolidated technical barriers by expanding production in Southeast Asia to meet the needs of American customers, and the high margin and R&D investment in their liquid cooling business have further strengthened technical barriers.
Domestic companies are catching up at an accelerated pace, seeking domestic alternatives and share breakthroughs through multiple channels
Domestic manufacturers have implemented the entire industry chain layout with core components such as liquid cooling plates, CDU, manifold, and UQD, and are making every effort to resolve the “last mile” certification pain points of entering overseas supply chains. Domestic companies are mainly expanding in two dimensions to obtain RVL code certification by going overseas indirectly through foundry for Taiwanese manufacturers or cooperating with chip giants in thermal management development. At the same time, domestic CSPs are also actively promoting investment in computing power, and the structural increase in capital expenditure is expected to directly drive the development of the local industrial chain. The rise of domestic computing power infrastructure has provided a valuable domestic alternative for manufacturers in mainland China.
Demand for high computing power drives accelerated iteration of liquid cooling technology, and technological breakthroughs bring new investment opportunities
The industry is evolving from display heat exchange to phase change latent heat utilization, and dual-phase cold plates and immersion liquid cooling have broad application prospects in ultra-high heat density scenarios. Cooling media are also being innovated, and fluorinated liquids with high insulation and high safety are gradually replacing traditional ethylene glycol solutions. Furthermore, chip-level heat dissipation technology such as microfluidic cooling is expected to become a revolutionary direction in the future, further integrating thermal management into the core of computing power. As technology continues to evolve, related companies are expected to overtake curves in the liquid cooling industry.
Risk factors:
AI computing power demand falls short of expectations; risk of technology path iteration and substitution; risk of declining profitability due to increased industry competition; risk of core customer certification and entry threshold; geopolitical and overseas policy risks.