Minsheng Securities: bullish on the accelerated development of AI and the penetration of liquid cooling technology, the data center liquid cooling industry chain will usher in a "golden age"

Minsheng Securities released a research report stating that "power" is the main contradiction in the current development of AI. With the improvement of AI chip performance, the heating phenomenon caused by high power consumption restricts the release of chip performance. Liquid cooling technology has become a "good medicine" to solve this problem, and it is also an important technical route to resolve the "power" contradiction. The company is optimistic about the acceleration of AI development and the penetration of liquid cooling technology, and expects the data center liquid cooling industry chain to usher in a "golden age". Minsheng Securities' key points are as follows: Liquid cooling is booming, how does the company view it? Recently, the liquid cooling sector has become a market focus, including servers, PCB, and optical modules. The company believes that in addition to the market seeking other targets, the more important reasons are that there have been many marginal changes in the liquid cooling sector recently, the industry is accelerating, and the technological trends are clear. The company emphasized in its January 25 release of "AIDC Power Series 1" that "speed" and "power" are the two core contradictions in the current development of AI, and in the power link, liquid cooling is the key to solving the contradiction of power density. Also in the release of "GTC Conference Outlook" in March 2025, it clearly pointed out the importance of upgrading liquid cooling solutions. The company believes that 2025 is the year when liquid cooling technology breaks through from 0 to 1, and industry trends combined with technological upgrades will make liquid cooling the next main battlefield for the upgrade of the AI industry. Marginal changes in liquid cooling: Overseas leading companies' performance upgrades, continuous emergence of new products On July 30, overseas liquid cooling leader Vertiv released its 25Q2 financial report, achieving revenue of 26.38 billion US dollars, exceeding guidance; while also upgrading a number of indicators including revenue and profit for the 2025 fiscal year, indicating the drive of liquid cooling demand for industry leaders. In terms of industry progress, recently, cabinets and switches compatible with liquid cooling have accelerated their push into the market: the GB300 NVL72 platform, which adopts a fully liquid-cooled rack design, was officially commercially launched in early July; not only that, liquid cooling is also widely used in switches and other races. Basic logic of liquid cooling: Increased power consumption + PUE policy promotion The rapid iteration of computing power chips, a significant increase in single-card power consumption, and an increase in single-cabinet power density due to the interconnection of multiple cards indicate a clear trend towards liquid cooling. NVIDIA's GB200 NVL72 single cabinet power reaches 140KW, while Huawei's CM384 super node power consumption is close to 500 kilowatts, both requiring liquid cooling. Many countries and international organizations have issued relevant policies, strict requirements on indicators such as energy utilization efficiency (PUE), etc., liquid cooling effectively reduces the energy consumption of refrigeration systems, and promotes compliance with PUE. Liquid cooling supply chain: Overseas leading companies are strong, and domestic forces are rising The liquid cooling data center industry chain consists of upstream liquid cooling components, midstream liquid cooling servers and infrastructure, and downstream liquid cooling data center users. The company believes that cabinet liquid cooling is a complete system solution, and companies that have systemic solutions will be more competitive in the future. However, component manufacturers are also accelerating certification. Liquid cooling components mainly include cold plates, UQD, manifolds, CDUs, connectors, solenoid valves, tanks, etc. Cold plates and UQD are worth special attention, as cold plates are core components in heat dissipation modules, with high material costs and complex processing technology, making up a large proportion of costs. The usage of UQD in GB300 has significantly increased compared to GB200. 2025 marks a critical period in the industry chain, and the company will continue to focus on sample delivery, testing, order implementation, and catalysis, and continue to track related manufacturers. Risk warning: AI development is below expectations; liquid cooling penetration is below expectations; intensified competition in the liquid cooling industry.