Summary of Liquid Cooling Market Update Industry Overview - The global liquid cooling market is experiencing rapid growth, with an expected annual growth rate of 20%-25% over the next 3-5 years. The market size for the first three quarters of 2024-2025 is projected to reach approximately $6-7 billion, with North America holding the largest share at 50%-55% [1][2][20]. Key Insights and Arguments - **Market Dynamics**: North American data centers are adopting alternative energy solutions such as renewable energy, battery energy storage systems (BESS), and distributed power generation to address power supply bottlenecks, although these solutions are costly [1][5]. In contrast, domestic manufacturers in China are circumventing chip restrictions by procuring previous-generation GPU chips and utilizing Southeast Asian data centers [1][5]. - **Cooling System Design**: High-power GPU systems in data centers typically employ N+N or 3+3+1 redundancy in power supply systems and N+1 redundancy in thermal management systems. Key components like circulation pumps in cold plate liquid cooling systems also utilize N+1 redundancy [1][6][7]. - **AI Cluster Operations**: In domestic AI cluster operations, both air cooling and liquid cooling coexist, with H100 liquid-cooled cabinets generally using a 30% air cooling and 70% liquid cooling configuration. Single-chip power consumption does not exceed 1,000 watts, primarily relying on unidirectional liquid cooling plates [1][8]. - **Cooling Technology Selection**: The choice between cold plate and silent liquid cooling technologies is based on the thermal flow density of GPU chips. Air cooling is recommended for under 1 kW, unidirectional liquid cooling plates for 1-2 kW, and bidirectional liquid cooling plates for over 2 kW. Future Ultra series may require a shift to bidirectional phase change solutions [1][8]. - **Market Share**: In North America, the company Viant Technology ranks among the top three in the liquid cooling market, holding a market share of 20%-25%. Their product line includes both air and liquid cooling systems, providing comprehensive solutions for data centers [2][20]. Additional Important Points - **Challenges in Silent Liquid Cooling**: Silent liquid cooling systems face high costs, maintenance difficulties, and large footprint issues, making widespread adoption challenging in the short term. However, significant growth in GPU chip capacity over the next 3-5 years may drive some high-density applications to transition to silent liquid cooling [3][10]. - **Corrosion Prevention**: To combat electrochemical corrosion in liquid cooling systems, deionized water or a solution containing 25%-30% propylene glycol is commonly used, with corrosion inhibitors added to enhance resistance [13][14]. - **Future Trends**: The development of liquid cooling media is shifting from unidirectional to bidirectional systems, with the introduction of microchannel technology. New refrigerants like electronic fluorinated liquids may replace traditional water-based coolants in the future [12][15][16]. - **Market Competition**: The refrigerant market is witnessing significant demand growth, particularly in liquid cooling media. North American clients primarily use refrigerants produced by European and American manufacturers, while domestic companies like Juhua and Dongyangguang are also producing refrigerants for local data centers [18][19]. - **Integration vs. Decoupled Delivery**: Integrated delivery systems provide a simplified deployment process, while decoupled delivery offers greater flexibility for future expansions. Each method has its advantages depending on specific user needs [21][23]. This summary encapsulates the key points from the liquid cooling market update, highlighting the industry's growth, technological advancements, and competitive landscape.

Core Insights - The article discusses the intertwining of computing power, capital, and energy in the new global infrastructure driven by AI, emphasizing that AI is not just an algorithmic revolution but a migration of industries influenced by computing power, funding, and geopolitical factors [2] - It highlights the emergence of a "Triangle Deal" among OpenAI, Oracle, and Nvidia, where OpenAI purchases cloud services from Oracle, which in turn buys GPUs from Nvidia, creating a closed-loop system of capital flow [4][5] - The article also points out that controlling data, interfaces, and switching costs is crucial for gaining market power in the AI industry [9] AI Power Struggle - The "Triangle Deal" involves OpenAI purchasing $300 billion worth of cloud services from Oracle over five years, with Nvidia benefiting significantly from GPU sales [4] - Nvidia's investment of up to $100 billion in OpenAI for building AI data centers illustrates the scale of capital required for AI infrastructure [5] - The competition in the AI industry is fundamentally about who controls the data and interfaces, as seen in the dynamics between OpenAI and Microsoft [9] Neo Clouds and Business Models - Neo Clouds represent a new business layer in the AI industry, providing computing power leasing and model hosting services [10] - There are two models for Neo Clouds: short-term contracts with high profit margins but high price risk, and long-term contracts that ensure stable cash flow but depend heavily on counterparty credit [11] - Inference Providers are emerging as key players, offering model hosting and efficient inference services, but they face high uncertainty due to their client base of smaller companies [12][13] AI Arms Race - The article discusses the strategic importance of AI in global power dynamics, particularly for the U.S. to maintain its global dominance [14] - In contrast, China is pursuing a long-term strategy to build a self-sufficient supply chain in semiconductors and AI, with significant government investment [15] Scaling Laws and Technical Challenges - Dylan Patel argues that Scaling Laws will not exhibit diminishing returns, suggesting that increasing computational resources will continue to enhance model performance [16] - The balance between model size and usability is a critical challenge, as larger models can lead to higher inference costs and lower user experience [17] - The need for efficient reasoning and memory systems in AI models is emphasized, with a focus on extending reasoning time to improve performance [22] AI Factory Concept - The AI Factory concept positions AI as an industrial output, where tokens represent the product of computational power and efficiency [28][30] - Companies must optimize token production under constraints of power consumption and model efficiency to remain competitive [30] Talent and Energy Dynamics - The scarcity of skilled individuals who can effectively utilize GPUs is highlighted as a significant challenge in the AI industry [31] - The energy consumption of AI data centers is growing, with projections indicating that AI data centers will consume approximately 624-833 billion kWh by 2025 [32][35] - The U.S. faces challenges in expanding its power generation capacity to meet the rising energy demands of AI infrastructure [36][37] Software Industry Transformation - The traditional SaaS business model is under threat as AI reduces software development costs, leading to a shift towards in-house development [38][39] - Companies with established ecosystems, like Google, may maintain advantages in the evolving landscape, while pure software firms face increasing challenges [40] Company Evaluations - OpenAI is recognized as a top-tier company, while Anthropic is viewed favorably due to its focused approach and rapid revenue growth [41] - Nvidia is seen as a dominant player in the semiconductor space, with significant influence over the AI infrastructure landscape [25] - Meta is highlighted for its potential to revolutionize human-computer interaction through its integrated hardware and software capabilities [42]

Summary of the Conference Call Company and Industry Overview - The conference call primarily discusses **ZTE Corporation** and the **domestic computing power industry** in China, particularly focusing on the developments in AI and semiconductor sectors [2][3][6]. Key Points and Arguments 1. **Market Concerns and Recovery**: Concerns regarding domestic computing power stem from tariffs, trade wars, and the H20 ban, leading to a decline in capital expenditure. However, since May, there has been a recovery in overseas demand for inference and application, indicating a formed commercial closed loop [2][3]. 2. **Profitability Improvement**: The profitability of the domestic computing power sector is improving, with specific segments like switches showing better performance. From a valuation perspective, these companies are more attractive compared to peers like Xinyi and Xuchuang [2][5]. 3. **ZTE's Dual Drivers**: ZTE is highlighted as a key player with dual drivers of performance release and technological breakthroughs. Although 2025 may see a decline in operator capital expenditure, a recovery in 5G investments is expected in 2026, alongside increased capital expenditure on computing power [2][6]. 4. **Impact of Tariffs**: Recent U.S. tariffs on semiconductors may pose short-term challenges but are expected to drive long-term advancements in domestic chip technology [2][7]. 5. **Technological Advancements**: The release of Deepsec's V3.1 model indicates significant technological breakthroughs in domestic chip design, enhancing the competitive strength of local companies [2][8]. 6. **GPU Supply Uncertainty**: There is uncertainty in overseas GPU supply, but domestic companies like Cambricon, Kunlun, and Muxi are making progress in this area. ZTE plans to incorporate domestic chips in its next-generation products, indicating an increase in domestic computing power demand [2][9]. 7. **ZTE's Comprehensive Capabilities**: ZTE is recommended as a core investment due to its full-stack capabilities in AI cluster computing, covering everything from chips to complete systems, and its involvement in liquid cooling technology [2][10]. 8. **R&D Investment**: ZTE has shifted focus from traditional connectivity to computing power, with R&D expenses projected to reach 24 billion yuan in 2024, accounting for 20% of total revenue, which is comparable to Huawei's investment levels [2][11]. 9. **Business Segment Performance**: ZTE's business segments include operators, government enterprises, and consumer markets. The operator segment is expected to decline by 15% in 2024, but 5G and 6G upgrades may provide future growth opportunities [2][12]. 10. **Chip Development**: ZTE's subsidiary, ZTE Microelectronics, has achieved significant milestones, including the commercialization of 130 types of chips and a shipment volume of 200 million units, covering a wide range of applications [2][13]. 11. **Ethernet Switch Chip Capabilities**: ZTE has developed Ethernet switch chips capable of 51.2T, surpassing competitors like Shengke, which have achieved lower levels [2][14][15]. 12. **DPU Significance**: The introduction of the Dinghai DPU is crucial for optimizing CPU and GPU collaboration, indicating ZTE's commitment to enhancing its market competitiveness [2][16]. 13. **Market Analysis Reports**: IDC's report highlights ZTE's comprehensive capabilities in the large model inference market, showcasing its critical components in computing and connectivity [2][17]. 14. **Scale-Up Architecture**: The scale-up architecture is essential for enhancing overall performance in computing clusters, presenting new market opportunities for domestic GPUs [2][18]. 15. **Competitive Landscape**: Huawei and Nvidia maintain a competitive edge in the global computing power sector due to their comprehensive capabilities in computing and networking [2][19]. 16. **Future Prospects for Domestic GPUs**: Domestic GPUs and overseas inference ASICs are expected to become significant growth areas in the latter half of 2025, although they may face challenges in cluster network construction [2][20]. 17. **Potential Collaborators**: Companies like Cambricon and Kunlun are positioned to assist in the interconnection deployment of domestic GPUs, leveraging their technical expertise [2][21]. 18. **ZTE Microelectronics' Financials**: ZTE Microelectronics reported revenues of 9.73 billion yuan in 2021, with profits exceeding 800 million yuan, indicating its growth trajectory [2][22]. 19. **ZTE's Future Outlook**: ZTE's comprehensive layout in the domestic computing power chain positions it favorably for future growth, with a projected PE ratio of 25 times for 2025, suggesting it is relatively undervalued [2][24]. Additional Important Content - The call emphasizes the importance of ongoing technological advancements and strategic shifts within ZTE and the broader domestic computing power industry, highlighting the potential for significant growth and investment opportunities in the coming years [2][3][6][10][24].