Soochow: Liquid cooling is transitioning from optional to essential, and breakthroughs in the domestic supply chain are accelerating.

Soochow has released a research report stating that liquid cooling is transitioning from an optional choice to a necessity, with the cold plate configuration remaining the mainstream solution for current AI cabinets. The liquid cooling industry is entering a resonant phase characterized by increased penetration rates, enhanced value per cabinet, and breakthroughs in domestic supply chains. We are particularly optimistic about overseas ASIC and NV core suppliers, as well as companies with secondary system integration capabilities. We suggest paying attention to secondary liquid cooling solution providers, manufacturers with outstanding CDU and engineering delivery capabilities, and component manufacturers. Key points from Soochow are as follows: Liquid cooling is moving from optional to essential, with cold plates still being the mainstream solution for current AI cabinets. The power density of AI cabinets is evolving towards the hundred KW/MW level, and liquid cooling offers advantages of low energy consumption, high heat dissipation, and low noise. Among them, cold plate liquid cooling is compatible with existing server forms and operational maintenance systems, has a mature supply chain, and has relatively low retrofitting costs, providing the strongest short-term certainty. The liquid cooling system consists of a primary side and a secondary side, with the primary side responsible for dissipating heat to the outdoor environment, accounting for approximately 25%-30% of the value; the secondary side, which is closer to the server, is responsible for transporting chip heat to the CDU and completing internal distribution, accounting for approximately 70%-75% of the value. The firm estimates that the global liquid cooling market will reach $10.2 billion in 2026 and $87.3 billion in 2030, with the primary side contributing about $2.9 billion and $21.3 billion, and the secondary side about $7.3 billion and $66 billion; within the secondary side, the internal value ranking is CDU, cold plate, QDC, manifold, and coolant, with CDU accounting for about half of the secondary side. The barriers on the secondary side are higher, and domestic breakthroughs have greater elasticity, while the primary side is more focused on engineering and cooling source equipment capabilities. On the secondary side, we focus on CDU, cold plates, and QDC, with a single KW value of 3,000 to 5,000 yuan. The CDU for the Rubin server has power upgrades and employs a 2N configuration, while the cold plate adopts a micro-channel method, with its unit value being over 20% higher than GB300. The CDU integrates pumps, heat exchangers, valves, sensors, and control systems; hardware determines heat exchange and flow capacity, while software algorithms dictate multi-cabinet flow distribution, temperature control accuracy, alarm linkage, and coordination between primary and secondary sides, with 2.3MW large power being the mainstream product. Cold plates are directly close to GPUs/CPUs, and MLC micro-channels are the trend for future upgrades, with precision processing, welding yield, and material compatibility determining product performance. QDC is the most prone to leakage point in the liquid cooling system, with sealing design, plug-and-pull lifespan, and pressure resistance and corrosion resistance being core aspects. The primary side is relatively more focused on cooling source equipment and engineering delivery, with domestic value per KW being 1,500 to 2,000 yuan, and overseas being 50-100% higher. Cooling towers/dry coolers are responsible for natural heat dissipation, while chillers take care of extreme scenario cooling and redundancy; overseas projects tend to use leading foreign companies like BAC and Marley, while domestic projects have a higher localization rate, placing more emphasis on cost, delivery, and local service capabilities. NVIDIA, Google, and domestic CSPs have differentiated commercial models, influencing the profitability elasticity of domestic manufacturers. NVIDIAs chain strongly controls specifications and certifications by the platform, with overseas/Taiwanese manufacturers having a clear first-mover advantage in components like CDU, cold plates, and QDC. Domestic companies often enter the market through systems like AVC, Cooler Master, Shuanghong, and Delta for OEM, second-sourcing, or whitelist certification, generally earning more from processing profits in the short term, with relatively small market shares. Google and other ASICs place more emphasis on self-manufacturing and direct supply by suppliers; large external CDUs are provided by companies like Shenzhen Envicool Technology and Cooler Master, where domestic suppliers have clearer opportunities for direct supply. The four-piece suite inside the cabinet is mainly procured by ODM organizations such as Tianhong, Flex, and Luxshare, which then connect with supporting manufacturers like Shenzhen Envicool Technology, Guangdong Shenling Environmental Systems, YD Electronic Technology, Lingyi Itech, and Baode, with profitability expected to outperform pure OEM. Domestic CSP chains are primarily focused on system integration and engineering delivery, with centralized L2L CDU and secondary piping solutions being more common; the certification threshold is relatively low but price-sensitive, benefiting domestic manufacturers with comprehensive product lines, rapid response, and local delivery capabilities. In the second half of 2026, domestic liquid cooling manufacturers are expected to accelerate the realization of overseas orders, with core supply chain performance elasticity to be anticipated. Risk Warning: AI computing power construction may fall short of expectations, the rise in liquid cooling penetration rates may be slower than anticipated, customer certification and introduction may not meet expectations, risks of intensified industry competition, and risks of technology route iteration.