Summary of Liquid Cooling Industry Conference Call Industry Overview - The liquid cooling industry is transitioning from traditional methods to full liquid cooling, enhancing overall value [1] - Upgrades in pipeline materials from rubber to stainless steel threaded pipes improve density and modularity, boosting cooling capacity [1] - The industry is experiencing high demand, particularly driven by AI infrastructure investments, with a strong outlook for growth [10] Company Performance - Taiwanese cooling manufacturers reported impressive fourth-quarter results, with expectations for a strong first quarter despite seasonal trends [4] - Chi Hong's December revenue increased by 110%, with an annual growth of 95%, benefiting from GB series shipments [4][8] - Shuanghong achieved a three-digit growth rate in December, with an annual growth of 48%, driven by increased market share in AI server liquid cooling systems [4][8] - Delta Electronics anticipates liquid cooling revenue to reach $3-3.5 billion by 2026, despite potential market share decline due to market expansion [5][9] Market Dynamics - The domestic liquid cooling sector is progressing at a pace comparable to Taiwanese firms, with leading companies showing similar advancements in ASIC liquid cooling [6] - The ASIC penetration rate is expected to significantly increase by Q3 2026, providing a reference for market timing [6] - The industry is currently in a prosperous state, with no signs of a slowdown in capital expenditures related to AI infrastructure [10] Technical Insights - A return water temperature of 45 degrees Celsius does not negatively impact liquid cooling components; instead, it indicates improved cooling capacity [7] - The Ruby series chips have higher power consumption compared to the GB series, but the secondary return water temperature remains at 45 degrees, indicating enhanced cooling performance [3] Future Outlook - The overseas market significantly influences Chinese cooling companies, with expectations for profit realization within the NV system [12] - 2026 is projected to be a pivotal year for liquid cooling expansion, with domestic companies expected to play a central role [2][12] - Investors are encouraged to be patient with domestic liquid cooling companies, as breakthroughs in orders could accelerate market growth [13] Recommendations - Continued monitoring of domestic leading liquid cooling companies is advised, as smaller firms are also making progress and could see stock price increases with substantial breakthroughs [13]

- The liquid cooling index (8841247.WI) has increased by 76.30% since the beginning of 2025 and by 71.99% since April 7, 2025, significantly outperforming the Wind All A Index during the same period[2][12][13] - Public fund holdings in the liquid cooling sector have rebounded since August 2025, based on real-time estimates derived from public market information such as fund net value, disclosed holdings, and research activities[3][17][19] - ETF fund holdings in the liquid cooling sector have been declining since July 2025, despite the overall growth in the scale of public ETF funds, which reached over 4.3 trillion yuan by the end of the second quarter of 2025[3][18][21] - The financing balance in the liquid cooling sector has been continuously rising since July 2025, indicating increased investor optimism about the market[3][23][25] - The chip yield characteristic of the liquid cooling index shows a current profitability effect of 12.97%, reflecting a momentum effect when the market's profitability is good and a reversal effect when it is weak[3][26][28] - The most frequently researched stocks by institutions in 2025 include Feilong Co., Ltd., Kexin Source, and Zhongshi Technology[4][30][32] - The stocks with the highest attention from Xueqiu influencers since August 1, 2025, include Inovance, Chuanhuan Technology, and Feilong Co., Ltd.[4][33] - The stocks with the highest net inflow of main funds since August 1, 2025, include Suzhou Tianmai, Tenglong Co., Ltd., and Huazheng New Materials[4][34][36] - The stocks that appeared on the Dragon and Tiger List since August 1, 2025, include Feilong Co., Ltd., Chuanhuan Technology, and Shuguang Digital Creation[4][37][38] - The stocks with the highest increase in the number of shareholders since August 1, 2025, include Zhongjie Automobile, Yinlun Co., Ltd., and Huafeng Aluminum Industry[4][37][40]

Investment Rating - The industry investment rating is "Outperform the Market - A" [7] Core Viewpoints - Liquid cooling technology is becoming a trend in data centers due to the increasing power consumption from AI chip performance upgrades, driven by three factors: industrial demand, policy support, and marginal changes in expectations [2][13] - The deployment of NVIDIA's GB300 and Huawei's Ascend 384 servers significantly boosts the demand for liquid cooling, as these advanced AI chips require efficient cooling solutions [3][14] - Various levels of policies have set clear requirements for liquid cooling and energy consumption in data centers, aiming for a national average PUE of 1.5 by the end of 2025 [4][15] - The overseas AI computing industry is showing strong performance, with Vertiv reporting a 35% year-on-year revenue increase in Q2 2025, indicating robust market demand [5][16] Summary by Sections Industry Investment Rating - The report maintains an investment rating of "Outperform the Market - A" [7] Industry Performance - The computer industry index increased by 6.31% this week, outperforming the Shanghai Composite Index by 4.61 percentage points [17][18] Key Industry News - The report highlights the significant advancements in liquid cooling technology and its adoption by leading AI chip manufacturers, which is expected to drive demand across the computing industry [3][14] - The report also notes the positive financial results from global leaders in liquid cooling, reflecting a favorable market outlook [5][16]