CITIC SEC: Emphasis on both channels and technology AI power reshapes competitive landscape

CITIC SEC released a research report stating that the AI wave is widening the power gap, and the IDC power system is undergoing a transformation. The increase in on-grid electricity prices brings investment opportunities for SMR; the transmission and distribution UPS is evolving towards a full direct current system, with continuously increasing output voltage levels; under the increase in power density of server power supplies, product quantity and price are rising in unison, driving demand for super capacitors. Optimistic about the increase in HVDC penetration rate under rapid expansion of IDC, the improvement of market share for domestic server power supply brands, domestic production of super capacitors and other new products going overseas, and recommending the layout of high-quality enterprises with both technology and overseas channels. Key points of CITIC SEC's report are as follows: Under the AI wave, the electricity gap is widening, with the US leading the demand for AIDC power The U.S. Energy Information Administration (EIA) predicts that by 2030, artificial intelligence may account for 3% to 4% of global electricity demand, with AI-driven data centers expected to account for 9% of total U.S. electricity demand by 2030, resulting in a shortfall of 14 GW. According to SemiAnalysis, by 2026, the computing energy consumption of AIDC will reach 40 GW, and future AIDC energy consumption in the U.S. will gradually increase to around 70% of global AIDC levels. The capital expenditure of cloud providers is the first DRIVER of data center construction, and the massive investment of U.S. tech giants in the AI field will drive rapid expansion of related power equipment and server markets. Cloud providers are seeking stable power sources, and the increase in electricity prices brings investment opportunities for SMR Currently, third-generation nuclear power technology remains mainstream in the industry, but with countries pursuing more stable, secure, reliable, and higher nuclear fuel utilization efficiency technologies, the development of advanced reactors and modular small reactors has become the focus of mature nuclear power markets. Oracle has announced that it has obtained licenses to build three small modular reactors (SMR) which will provide power for data centers currently under design at a price of around $80 per megawatt-hour (generally nuclear power on-grid electricity prices are around $30 per megawatt-hour). In terms of costs, nuclear energy startup Oklo is focusing on the development and construction of modular small nuclear reactors. According to Oklo's website, the company expects the 15 MW version of its "Aurora powerhouse" reactor to cost around $70 million and will start construction at its site in Idaho in 2026, with completion in 2027; the company estimates that the cost of leveled electricity is between $80-130 per MWh. In addition, a number of leading companies are accelerating the development and construction of commercial modular small reactors, driving the prosperity of the industry chain. Industry trends: Focus on energy quality and density, transmission and distribution of electricity is evolving towards a full direct current system Compared to traditional data centers, AIDC loads have significant dynamic characteristics, with large fluctuations in load during operation, characterized by periodic, substantial, concurrent, and instantaneous impacts. 1) On the transmission and distribution side, AC400V UPS and DC240V high-voltage direct current power supply solutions are mature, and as the proportion of direct current devices (such as photovoltaics, energy storage, IT servers, etc.) increases, full direct current power supply architecture is gradually becoming a trend, with Panama Power's direct current transmission solution as a representative potentially becoming the future direction. 2) Server power supply architecture is divided into three levels: PSU (AC/DC conversion as the main, 480vac-48vdc), bus conversion (48vdc-12vdc), and voltage regulation module (12vdc-0.8vdc). When multiple servers are integrated into one cabinet, the power density of the cabinet significantly increases, with centralized PSU merging end power supply as a development direction; meanwhile, super capacitors and BBU are used to maintain peak load to ensure optimal server performance, with huge growth potential. Market space: Quantity and price rise together, new demand is evident in high power scenarios 1) Server power supplies are the highest value link in AIDC power system investment, with new demand significant in high-power scenarios. Considering the complex topology structure brought about by the upgrading of power density, the unit value of a 5.5kW power supply after mass delivery is estimated to be around 2.5 yuan/w. Combined with the expected shipments of NV Rack, the market space for AC/DC power supplies is expected to be 34.3 billion yuan in 2025/2026, compared to 3.7 billion yuan in 2023, representing a compound annual growth rate of over 150% from 2023 to 2026. 2) DC/DC: Integrated onboard converter (IBC) is a trend, focusing on the increase in unit price at the VRM stage. The value chain of the DC/DC stage is measured, with a market space of 3.28 billion yuan in 2024, and is expected to reach 4.8 billion yuan by 2027, with a compound annual growth rate of 18% from 2024 to 2027. 3) Transmission and distribution: Benefitting from the increased penetration rate of new technologies brought about by the construction of overseas data centers by large companies, combined with the increase in value brought about by the upgrading of third-generation HVDC technology, the HVDC market space is expected to increase from 2.56 billion yuan in 2024 to 43.15 billion yuan in 2028. Competitive landscape: Emphasizing both technology and channels, expanding into overseas markets. 1) The market for server AC/DC power supply modules is currently dominated by Taiwanese manufacturers. 2) DC/DC is mainly dominated by embedded module manufacturers. 3) Transmission and distribution: Vertiv, as a leading manufacturer in liquid cooling, combines energy management with thermal management products to enhance overall performance and efficiency. Risk Factors Risks include underperformance in AI core technology development; lower-than-expected shipments of NVIDIA servers; lower-than-expected AI expenditures by European and American companies; lower-than-expected upgrading and iteration of power products; lower-than-expected adoption of domestic alternatives; substantial increase in bulk raw material prices; continued intensification of industry competition, etc.