CITIC SEC: Optical module temperature control is a scarce link in the AI computing power chain; focus on three main lines.

CITIC SEC released a research report stating that with the large-scale ramp-up of 800G optical modules and 1.6T entering its first year of volume production, per-module power consumption and requirements for temperature control precision are rising significantly. Optical module temperature control is upgrading from a "supporting link" to a "performance-determining link." Optical module temperature control has formed a three-tier system: chip-level precision temperature control (Micro-TEC + ceramic substrate heat sink), interface thermal conduction (TIM gel/graphene pads), and module-level heat spreading (VC vapor chamber/cold plate). Per-module temperature control value content is systematically shifting upward with each rate iteration; combined with co-located heat dissipation of the optical engine and switch chip under CPO/NPO architectures, the industry is seeing simultaneous growth in volume and price. In terms of competitive landscape, core links such as TEC and ceramic substrates have long been dominated by Japanese manufacturers, while domestic manufacturers are accelerating breakthroughs, leaving broad room for import substitution. Three sub-sector investment themes are recommended: TEC and ceramic substrates, TIM and graphene thermal materials, and VC vapor chambers and liquid cooling structural components. CITIC SEC's main points are as follows: The "thermostat system" of optical modules: a three-tier heat dissipation chain with interlocking links. The core contradiction in optical module heat dissipation is not the absolute value of power consumption, but rather that "heat is too concentrated" DSP, lasers, TIA and other components are integrated in an extremely small space, creating extremely high local heat flux density; moreover, laser wavelength drifts with temperature at approximately 0.1nm/C, while WDM system channel spacing is only 0.8nm. Loss of temperature control will directly lead to channel crosstalk, increased bit error rates, and degraded device lifespan. Optical module temperature control thus forms a three-tier system: Chip-level precision temperature control Micro-TEC semiconductor coolers provide 0.1C-level constant temperature for lasers, paired with aluminum nitride ceramic substrates and tungsten-copper/molybdenum-copper heat sinks for thermal conduction and thermal expansion matching; Interface thermal conduction TIM thermal interface materials fill microscopic air gaps between chips and housings/VC (air has extremely poor thermal conductivity), with 800G mainstream solutions using 8-15W/mK thermal conductivity gel; Module-level heat spreading VC vapor chambers rapidly spread local hot spots. Optical module liquid cooling currently has two growth logics: Growth logic one: AI computing power drives simultaneous growth in optical module volume and price, with the temperature control link scaling in tandem. AI cluster construction is driving explosive demand for high-speed optical modules, with 1.6T expected to further rise to over 70 million units by 2027. Temperature control is a standard link for every high-speed optical module. Demand for TEC, ceramic substrates, TIM, VC and other materials scales in sync with module shipments, and the industry scale has entered a high-speed expansion channel; at the 1.6T stage, with material specification upgrades and increased usage, per-module temperature control value content rises further, and the growth rate of the temperature control link is expected to continue outperforming the optical module industry itself. Growth logic two: High speeds and CPO/NPO architectures push up heat dissipation density and precision requirements, systematically shifting value content upward. The heat flux density of 1.6T module DSP, driver chips, and lasers has increased significantly, with some solutions' power consumption already entering the 20-30W range. The heat dissipation approach is shifting from "passive heat dissipation" to "active temperature control": internal TIM is upgrading from 8-15W/mK gel to 15-20W/mK (some with added diamond powder), and is expected to further switch to graphene thermal pads; VC vapor chamber penetration is increasing markedly, with customized solutions such as integrated vapor chambers (integrated housing and heat spreading structure design) bringing additional value premiums; TEC shows a "volume growth" logic while value content also rises. Under CPO/NPO architectures, the optical engine and switch ASIC coexist in the same constrained heat dissipation space, making high-end heat dissipation shift from "optional" to "mandatory": thermal pads or phase-change materials are needed between the optical engine and shared heat sink, the laser side needs ceramic substrate + heat sink + TEC, and the system side introduces VC or liquid cooling cold plates the technical barriers and per-unit value content of the temperature control link are jumping simultaneously. Overseas manufacturers' dominant position is loosening, domestic manufacturers have great potential. The TEC link has long been dominated by Japan's Yamato Thermistor and KELK, with domestic localization rate below 5% in 2023. Currently, domestic manufacturers' 400G/800G Micro-TEC has achieved batch supply, 1.6T products have entered small-batch verification, capacity is rapidly ramping, and the localization rate has risen to approximately 15%. Ceramic substrates and upstream AlN powder have long been monopolized by Japan's Tokuyama, Kyocera and others. Currently, domestic substrate manufacturers have entered the supply chains of leading optical module manufacturers and become main suppliers, and some manufacturers in the powder segment are also accelerating sample verification. In the TIM and graphene thermal pad fields, mainland manufacturers lead in technology, with mass-produced products achieving thermal conductivity of 130W/mK level, entering overseas major customer supply chains and advancing application introduction in 1.6T optical modules. Referring to the import substitution path of other links in optical communications, domestic manufacturers in the temperature control link, leveraging cost, response speed, and capacity advantages, have high certainty and great elasticity in share gains. Investment strategy: Optical module temperature control is a scarce link in the AI computing power chain with triple logic of "certain supporting role + value content shifting upward + import substitution." Three sub-sector investment themes are recommended: TEC and ceramic substrates (core link of chip-level precision temperature control, with the highest Japanese manufacturer share and greatest import substitution elasticity); TIM and graphene thermal materials (fastest material upgrade and iteration driven by 1.6T/CPO/NPO, with mainland manufacturers leading in technology); VC vapor chambers and liquid cooling structural components (penetration rising with certainty as power consumption increases, extending toward high-value solutions such as integrated vapor chambers and liquid cooling cages). Risk factors: 1) AI computing power demand falling short of expectations; 2) 1.6T and CPO/NPO industrialization progress falling short of expectations; 3) Changes in heat dissipation technology routes (e.g., non-cooling solutions penetrating faster than expected); 4) Domestic manufacturers' customer certification and mass production progress falling short of expectations; 5) Intensified industry competition putting pressure on prices and gross margins.