Core Viewpoint - The article focuses on the delivery and value breakdown of liquid cooling systems in NVIDIA's GB200 and GB300 server racks, highlighting the differences in design and component value between the two models [2]. Liquid Cooling Server Rack Components - The liquid cooling server rack includes several key components such as manifolds, cooling distribution units (CDUs), pumps, water tanks, plate heat exchangers, and cooling towers [5][6][8][9]. Value Breakdown of Liquid Cooling - The article emphasizes the importance of understanding the architecture of GB200 to facilitate the value breakdown analysis [21]. - For GB200, the demand for large cold plates is 45 units, while GB300 requires 117 units of small cold plates [22]. - The value of a large cold plate in GB200 is $650, whereas a small cold plate in GB300 is valued at $240 [23]. Supplier Dynamics - The supplier landscape for cold plates has shifted significantly from GB200 to GB300, with Cooler Master becoming the primary supplier for GB300, capturing over 55% of the market share [24][25]. - The production process for GB300's liquid cooling plates involves more integration steps compared to GB200, indicating a more complex supply chain [25]. Component Pricing - The price of hoses for GB200 is $1,200 per cabinet, while for GB300, it has increased to between $1,800 and $2,000 per cabinet [26]. - The price of quick disconnects (QDs) has also increased from $45 per pair in GB200 to $55 per pair in GB300 [28]. Technological Upgrades - The quick disconnect technology has evolved from UQD in GB200 to NVUQD in GB300, with a significant change in the supplier base, reducing the share of European and American companies [29]. - The CDU supplier model has transitioned from a single authorized supplier for GB200 to a more diversified supplier base for GB300, enhancing market responsiveness [30]. Profit Margins - The gross margin for CDUs is approximately over 50%, while for cold plates, manifolds, and quick disconnects, it is around 30% [30].

Investment Rating - The report assigns an "Accumulate-A" investment rating to the company, with a target price of 229.76 CNY per share [6][16]. Core Views - The company's revenue for the first half of 2025 reached 386 million CNY, a year-on-year increase of 78.24%, while net profit attributable to shareholders was 31 million CNY, up 33.19% year-on-year [1][2]. - The growth in revenue is driven by the increasing demand for liquid cooling products due to the rising computational needs of data centers, alongside the expansion of production capacity from the company's investment projects [2][3]. - The company is focusing on advanced thermal management solutions, with significant revenue growth in its thermal management materials and devices segment, which achieved 342 million CNY in revenue, a 67.77% increase year-on-year [3][11]. Summary by Sections Financial Performance - In H1 2025, the company reported a gross margin of 27.03%, an increase of 1.12 percentage points year-on-year, with stable expense ratios for sales, management, and R&D [2][12]. - The company expects revenues of 977 million CNY, 1.392 billion CNY, and 1.926 billion CNY for 2025, 2026, and 2027 respectively, with year-on-year growth rates of 48.83%, 42.52%, and 38.36% [12][13]. Market Position and Growth Drivers - The demand for liquid cooling solutions is anticipated to rise significantly, particularly in AI data centers, which will enhance the company's order growth [3][16]. - The company is investing in new technologies, including graphene and synthetic graphite thermal interface materials, to strengthen its position in the thermal management market [3][11]. Valuation and Comparables - The report utilizes a price-to-sales (PS) valuation method, assigning a PS of 19 times for 2025, reflecting the expected growth in thermal management demand and the company's strong customer base [8][16]. - Comparables in the thermal management sector include Suzhou Tianmai and Yingweike, which have similar product offerings and market dynamics [16][19].

Summary of Liquid Cooling Industry Report Industry Overview - The liquid cooling industry is experiencing significant growth, driven by the increasing demand for data centers and the limitations of traditional air cooling systems. The global liquid cooling market is expected to exceed 150 billion RMB in 2026, representing a tenfold increase from 2025's 15 billion RMB [1][4]. Key Points Market Growth and Projections - The liquid cooling market is projected to reach over 150 billion RMB by 2026, with a domestic market penetration rate expected to reach 30%-40% between 2027 and 2029 [1][4]. - The industry is currently in an explosive growth phase, with the application of liquid cooling technology in data centers anticipated to accelerate significantly by 2025 [2][4]. Technology and Types - Liquid cooling technology is categorized into three main types: spray cooling, cold plate cooling, and immersion cooling, with cold plate cooling currently being the dominant method [1][5]. - The NVIDIA MBR72 cabinet serves as a benchmark, with a total cabinet value of approximately 800,000 RMB, including components such as the cold plate (250,000 RMB) and CDU (300,000 RMB) [1][5]. Competitive Landscape - In the CDU (Coolant Distribution Unit) sector, domestic companies like NVIDIA, China Sunway, and Silver Wheel dominate, while international competitors include Vertiv, Gucci, and Schneider [1][6]. - Domestic brands are expected to enter overseas markets quickly due to the high barriers in business relationships and consistency control required for components like cold plates and quick connectors [6]. Key Components and Suppliers - Cold plates are critical components in liquid cooling systems, directly attached to the back of chips, with leakage being a key concern for manufacturers and end-users [1][8]. - Major suppliers for quick connectors include both international (CBC, Pico) and domestic companies (Invec, Chuanhuan, Suliang) [3][9]. - The manifold component is simpler and has a higher presence of domestic companies, including Zhongguangdian, Shenling, Invec, and Silver Wheel [10]. Development Trends - The liquid cooling technology has gained attention since 2023, with companies like Feilong Co. having a first-mover advantage in the automotive thermal management sector, supplying Huawei and covering the NVIDIA supply chain [1][11]. - Companies like Silver Wheel and Topu are noted for their integrated capabilities across multiple liquid cooling components and their entry into the NVIDIA supply chain through Taiwanese manufacturers [11]. Additional Insights - The increasing power consumption of chips and the need for effective temperature control are driving the adoption of liquid cooling solutions, as chip lifespan can decrease by 50% with every 10-degree increase in operating temperature [2]. - The precision requirements for quick connectors in servers are stringent, with leakage limits set at no more than 0.25 drops over five consecutive insertions [3][9].

Investment Rating - The report maintains an "Accumulate" rating for the company [1] Core Views - The company is expected to benefit from dual growth in the semiconductor and liquid cooling sectors [1] - The company's revenue for H1 2025 was 1.409 billion, a slight year-on-year decrease of 0.6%, with the food business showing a 5.4% increase [7] - The company has made significant progress in domestic substitution and is optimizing its customer structure in the semiconductor field [7] - The report has adjusted the net profit forecast for 2025-2027 to 255 million, 314 million, and 415 million respectively, reflecting a dynamic PE of 62, 50, and 38 times [1][7] Financial Performance Summary - Total revenue for 2023 is projected at 2.711 billion, with a year-on-year growth of 3.49% [1] - The net profit attributable to the parent company for 2023 is estimated at 235.9 million, down 31.58% year-on-year [1] - The company's gross margin for H1 2025 was 24.5%, a decrease of 1.1 percentage points year-on-year [7] - The operating cash flow for H1 2025 improved significantly, reaching 130 million, a year-on-year increase of 41.8% [7] Market Data - The closing price of the stock is 38.73 yuan, with a market capitalization of 15.794 billion [5] - The price-to-earnings ratio (P/E) is currently at 66.95 [5] - The company has a total asset-liability ratio of 60.01% [6]

Core Viewpoint - The company, AVIC Optoelectronics (002179.SZ), is recognized as one of the early suppliers in China capable of providing comprehensive liquid cooling system solutions, focusing on efficient heat dissipation and intelligent temperature control [1] Group 1: Company Capabilities - The company has extensive experience in high-efficiency heat dissipation, intelligent temperature control, precise flow distribution, and system integration [1] - Main products include fluid connectors, chassis, cold plates, manifolds, CDU, and immersion tanks, allowing the company to offer customized complete liquid cooling solutions [1] - The company has played a significant role in drafting multiple national and industry standards [1] Group 2: Application Areas - Liquid cooling products are widely used in defense, industrial, and high-end equipment manufacturing sectors, particularly in data centers, supercomputing, energy storage, and wind power [1]

Core Insights - The report from Dongfang Securities indicates that liquid cooling technology is transitioning from optional to essential, with a projected global penetration rate of around 30% in data centers by 2026 [1] Group 1: Market Trends - The year 2025 is expected to mark a significant acceleration in the penetration of liquid cooling technology, driven by the increasing demand for AI computing power, which traditional cooling methods can no longer adequately support [1] - Major cloud service providers, including Nvidia, Google, Microsoft, Meta, Huawei, and Alibaba, are adopting liquid cooling solutions to meet the rising thermal management needs of high-power chips [1] Group 2: Market Potential - The liquid cooling market is projected to reach approximately 68.8 billion yuan globally by 2026, with the domestic market estimated at around 17.9 billion yuan, indicating substantial market potential [2] - Key components in the liquid cooling system, such as CDU, liquid cooling plates, and manifolds, account for over 90% of the system's value [2] Group 3: Supply Chain Dynamics - The demand for liquid cooling solutions is expected to surge due to the increased deployment of Nvidia's GB200/300 servers and the accelerated adoption of ASIC chips by cloud service providers [3] - Domestic liquid cooling suppliers are anticipated to expand internationally as the overseas market experiences rapid growth and existing suppliers struggle to meet demand [3] Group 4: Competitive Landscape - The liquid cooling supply chain consists of system integrators, core component suppliers, and niche component suppliers, with a current market dominated by foreign and Taiwanese companies [4] - Strong domestic liquid cooling manufacturers are expected to transition from component suppliers to system integrators, enhancing their competitive positioning in the market [4]

Group 1 - The liquid cooling technology is gaining traction due to the increasing demand for efficient heat dissipation in high-density computing environments, with significant stock price increases observed in companies like Southern Pump Industry and Yonggui Electric [1] - Liquid cooling, which utilizes liquid as a heat transfer medium, offers higher thermal conductivity and lower energy consumption compared to traditional air cooling methods, and is categorized into direct and indirect liquid cooling types [1] - Major tech companies such as NVIDIA, Microsoft, Google, and Meta are accelerating the adoption of liquid cooling technology, with NVIDIA's GB300 system featuring a fully liquid-cooled design [1] Group 2 - Liquid cooling technology is expanding beyond GPU servers, with companies like Broadcom integrating it into switch devices, and AMD emphasizing liquid cooling in its MI350 series products [2] - The Chinese liquid cooling server market is projected to grow rapidly, reaching a market size of $2.37 billion in 2024, representing a 67% increase from 2023, with a compound annual growth rate of 46.8% expected from 2024 to 2029 [2] - The demand for liquid cooling solutions is driven by the growth of AI computing needs, leading to a transformation in cooling technologies towards modular and intelligent solutions [3] Group 3 - Companies such as Yingweike, Gaolan Co., and Zhongke Shuguang are recognized as key players in the liquid cooling sector, providing various solutions and components for data centers [3][4] - Yingweike is a leading supplier of liquid cooling solutions for major tech companies, while Gaolan Co. specializes in critical components for energy storage liquid cooling [4] - Other notable companies include Feilong Co., which supplies electronic pumps and temperature control valves, and Oulutong, which showcased a new generation of immersion liquid cooling solutions at a major tech conference [4]

Summary of Liquid Cooling Market Research Industry Overview - The liquid cooling market is driven by the growth in AI chip power consumption and shipment volumes, as well as the development of complete cabinet solutions [2][4] - The market potential for liquid cooling in AI chips is estimated to reach hundreds of billions of RMB with approximately 10 million AI chips utilizing liquid cooling [2][4] Key Insights - **Value Breakdown**: - Single chip liquid cooling value is approximately 2,000 to 3,000 RMB, while single cabinet liquid cooling value ranges from 300,000 to 600,000 RMB depending on the model [2][6] - The total market space for 100,000 ML72 cabinets could reach 500 to 600 billion RMB [6] - **Components of Liquid Cooling Systems**: - Liquid cooling systems are divided into primary (external data center equipment) and secondary (internal server equipment) sides [2][7] - Key components include: - Cold plates (30-40% of value) - Quick disconnect couplings (QDC) (10-20% of value, highest profit margin of 50-60%) - Central Distribution Unit (CDU) (10-20% of value, profit margin around 30%) - Manifold and piping (approximately 10% of value) [7][12] - **Material and Cost**: - Cold plates are primarily made of copper, with CPU cold plates valued at around 500 RMB and GPU cold plates at about 1,000 RMB [10] - Domestic quick disconnect couplings are valued at approximately 600 RMB, while overseas they can reach 1,300 RMB [11] - CDU costs about 1,000 RMB per kW domestically and 200-240 USD per kW internationally [11][12] Market Dynamics - The growth of the liquid cooling industry is primarily driven by the increasing power consumption of chips and cabinets [4][6] - Not all chips require liquid cooling; traditional air cooling remains viable for many [4] - Future advancements in cooling technology, such as phase change or immersion cooling, may significantly increase the value contribution of liquid cooling systems [5][13] Additional Considerations - The primary side of the cooling system is mature and competitive, involving equipment like dry coolers and cooling towers [5][9] - The choice of cooling equipment depends on the climate and water resources of the data center's location [9] - The liquid types currently used are mainly water-based solutions, but future innovations may introduce more advanced fluids, enhancing system value [13]