China Galaxy Securities: Demand for intelligent computing drives the high prosperity of AIDC, focusing on the new trend of power supply and distribution systems.

China Galaxy Securities released a research report stating that in the current rapid development of AI, the rise of complex AI tasks such as large models, deep learning, and natural language processing has led to an explosive growth in computing power demand. The foundation of computing power is electricity, and with the help of technological innovations, models like DeepSeek have reduced training and inference costs, speeding up the application of AI and hardware deployment, which will undoubtedly increase the long-term demand for computing power. In this situation, the AIDC market is showing great prosperity, indicating significant investment opportunities in related areas. It is recommended to pay attention to manufacturers of AC/DC server power supplies, HVDC/UPS uninterruptible power supplies, and other related companies. The main points of China Galaxy Securities are as follows: At the end of AI lies computing power, and at the end of computing power lies electricity. DeepSeek will increase long-term demand for computing power. With the rapid development of AI, tasks like large models, deep learning, and natural language processing require a large amount of computing resources. Computing power heavily relies on electricity supply. The DeepSeek model, through the use of the PTX programming language and innovative engineering capabilities, has improved performance while reducing training and inference costs, accelerating the popularization and deployment of AI applications and hardware. The lower training and inference costs are expected to lead to a long-term trend of increased demand for computing power. Smart computing demand boosts AIDC prosperity, and the power supply system is crucial. There are significant differences between AIDC intelligent computing centers and general-purpose IDC in technological architecture, cooling modes, application scenarios, and customer groups, with AIDC becoming a trend. Despite the impact of DeepSeek, AIDC will continue to see growth in chip power and single cabinet power, leading to sustained strong demand for electricity. AIDC places high demands on power supply stability and reliability, further emphasizing the importance of the power supply system. AIDC server power supply prices are rising along with quantity. Chip power is rapidly increasing. With the continuous growth of computing power demand and improvements in cooling technologies, chip power continues to rise. In the future, as AIDC servers mass deploy high-power chips, the power level of the cabinets is expected to continue increasing. According to Vertiv's predictions, from 2024 to 2029, the number of AIGPUs per single cabinet is expected to increase from 36 to 576, and the peak power density of cabinets is expected to increase from 130-250KW to 900-1000KW. With the entry into the megawatt era, the server power supplies that accompany them are expected to see a rise in prices along with quantity. UPS uninterruptible power supplies evolving towards HVDC. The architecture of data center power supply systems is continuously evolving from UPS-HVDC-Panama power supply-solid-state transformer SST. UPS is the most widespread uninterruptible power supply system, with advantages such as high power supply stability, strong compatibility, and diverse functions, but it has relatively low efficiency, takes up large space, and has high maintenance costs. HVDC power supply has advantages such as high efficiency, high reliability, and small footprint, but limited compatibility and high technical difficulty. Panama power supply and SST flexible integrated transformer and HVDC are the future development trends. Although Panama has a high level of acceptance in self-built Internet IDC, its overall penetration rate is still relatively low, while SST, as an efficient energy internet node, is in the experimental research and development stage. The company believes that UPS and traditional HVDC will continue to develop in parallel for the long term, and the penetration rate of high voltage level HVDC is expected to rapidly increase in the next 5 years. The mass application of high-power chips and power products will be an important catalyst. Investment recommendations: 1. AC/DC server power supplies: It is recommended to pay attention to high-efficiency, high-power density server power supply manufacturers Shenzhen Megmeet Electrical (002851.SZ) and Shenzhen Honor Electronic (300870.SZ). 2. HVDC/UPS uninterruptible power supplies: It is recommended to pay attention to HVDC representative manufacturers Hangzhou Zhongheng Electric (002364.SZ), Shenzhen Hopewind Electric (603063.SH), and UPS representative manufacturers Kehua Data Co., Ltd. (002335.SZ) and Shenzhen Kstar Science & Technology (002518.SZ). 3. Distribution equipment: It is recommended to pay attention to Guangdong Mingyang Electric (301291.SZ), Hainan Jinpan Smart Technology (688676.SH), Zhejiang Chint Electrics (601877.SH), and Shanghai Liangxin Electrical (002706.SZ). 4. Backup power BBU/diesel generators: It is recommended to pay attention to companies involved in the engine sector such as Weichai Heavy Machinery (000880.SZ), Shanghai Cooltech Power (300153.SZ), companies involved in the BBU sector like Eve Energy Co., Ltd. (300014.SZ), Jiangsu Azure Corporation (002245.SZ), and companies involved in the supercapacitor sector such as Nantong Jianghai Capacitor (002484.SZ). Risk warning: Risks include lower-than-expected computing power demand, short-term fluctuations in the AI industry chain upstream and downstream, lower-than-expected development of AI applications, and geopolitical risks.