China Securities Co., Ltd.: AIDC construction drives demand for supporting equipment, focusing on the industrial chain of gas turbines, engines, etc.

China Securities Co., Ltd. released a research report stating that the construction of AI data centers (AIDC) has entered a high-speed growth period. It is estimated that the power capacity demand brought by American AI between 2025-2028 will have a CAGR of approximately 55%. Over the next three years, there will be a cumulative demand exceeding 150GW, leading to a significant increase in power demand. This will create opportunities for supporting equipment, especially as North America's current power shortage issue becomes more prominent. Self-built power sources are becoming a major trend, with gas turbines being prioritized as the main power source for AIDC due to their quick response, high power adaptability, lower generation costs, and high reliability. The current global orders for gas turbines from overseas leading manufacturers have exceeded their current production capacity level by a large margin. Global gas turbine giants are expanding their production capacity, but the overseas upstream supply chain expansion is relatively cautious. This continuous shortage in the industry chain is becoming more severe, presenting opportunities for the domestic gas turbine industry chain and core components. Additionally, attention should be paid to filling the gaps in aviation and maritime fuel conversion solutions. On the demand side, AIDC construction has entered a high-speed growth period, presenting opportunities for supporting equipment. The parameter size of AI large models continues to increase, placing higher demands on computing power. The construction of AIDC is expected to enter a high-speed growth channel in the future. CAPEX investments in AIDC mainly include IT equipment, civil engineering, and electromechanical infrastructure. The value of the infrastructure accounts for approximately 15%-20%, with the electric power supply system accounting for 50%-60%. The growth in computing power demand will drive rapid growth in the market for supporting equipment. Based on estimated chip shipments from major manufacturers, the power capacity demand brought by North American AI between 2025-2028 will be 19, 32, 49, and 71GW, with a CAGR of approximately 55%. The cumulative demand will exceed 150GW from 2026-2028. On the supply side, North America's power shortage issue is becoming more prominent, leading AI giants to accelerate their deployment of self-built power sources. North America is the main force behind AIDC construction, leading to a high demand for electric power. With the current power shortage in North America, the retirement pace of thermal power units is steady or accelerating, delaying the grid connection of new power generation capacity. Self-built power sources are becoming a major trend, with gas turbines being prioritized as the main power source for AIDC due to their quick response, high power adaptability, lower generation costs, and high reliability. AI giants such as xAI, Google, and Meta are ordering gas turbines for AIDC power construction. The domestic gas turbine industry chain and core component manufacturers are experiencing opportunities. The global gas turbine market is showing a significant mismatch between supply and demand, with leading companies having orders far exceeding their current production capacity levels. To match the strong order demand and ensure delivery capabilities, global gas turbine giants are expanding their production capacity. However, overseas upstream supply chain expansions are relatively cautious, leading to a continuous shortage in the industry chain. Domestic component manufacturers are benefiting from the overspill demand and have introduced products to overseas clients, including blades, castings, and heat recovery steam generators (HRSG). Additionally, the domestic gas turbine industry, represented by CHINA GAS HOLD, is at a critical stage of transitioning from "long-term reliance on imports" to "independent research and commercialization," with the possibility of overseas market entry in the future. Due to the continuous expansion of the supply-demand gap and equipment demand overspill, there is a focus on filling the gaps in aviation and maritime fuel conversion solutions. As the key component blades for gas turbines are in short supply and the delivery period for heavy gas turbines has extended to over 5 years, multiple units of light gas turbines can be used in parallel as one of the solutions to fill the power gap. Trends to watch include aviation fuel conversion and the conversion of marine diesel medium-speed engines to fuel.