Preface:

As the power consumption of a single AI chip exceeds 1,000 watts and approaches 2,000 watts or more, traditional air cooling has reached its physical limits. By 2026, driven by policy mandates, surging chip power consumption, and mature technical solutions, liquid cooling technology will transition from "pilot demonstrations" to "large-scale deployment," marking a turning point where the global market surges from tens of billions to hundreds of billions.

Author | Fang Wensan

Image Source | Network

Core Drivers: Demand Shifts from "Optional" to "Essential"

The compute surge driven by generative AI is transforming data centers from "energy hogs" to "furnaces." NVIDIA's B200 chip has a thermal design power (TDP) of approximately 1,000W, with subsequent B300 and R200 chips jumping to 1,400W and 2,300W, respectively. Chip power consumption from companies like AMD and Google is also approaching or exceeding the kilowatt threshold. As power density per rack reaches 50kW or even 100kW, air cooling is no longer efficient or energy-effective. Liquid cooling, with a thermal capacity a thousand times greater than air, has become the only viable technology for supporting high-density compute.

Globally, energy consumption and carbon emissions from data centers have become regulatory focal points. China mandates that by 2026, newly built large-scale data centers must achieve a PUE (Power Usage Effectiveness) below 1.15. Traditional air-cooled data centers typically have a PUE above 1.5, while liquid cooling solutions can stably reduce it to 1.1-1.2, making it a rigid requirement for achieving "green compute" goals.

Furthermore, the clearest signal of an industry inflection point comes from procurement plans of leading customers. NVIDIA has disclosed that orders for its Blackwell and Rubin architecture GPUs will reach approximately 14 million units over the next five quarters, directly creating a liquid cooling market worth tens of billions of dollars. Cloud giants like Google and Meta, with their self-developed ASIC chips, also plan to ship millions of units by 2026, opening a second growth pole for the liquid cooling market beyond GPUs.

Market Outlook: Scaling from Tens to Hundreds of Billions

Strong drivers are propelling exponential growth in the liquid cooling market. Market research firm TrendForce expects the penetration rate of liquid cooling in AI data centers to surge from approximately 14% in 2024 to 40% by 2026. Orient Securities also predicts that global data center liquid cooling penetration will reach around 30% by 2026, meaning the proportion of new data centers adopting liquid cooling will more than double within two years.

Based on market size projections from multiple securities firms, 2026 will mark the starting point for a liquid cooling market worth hundreds of billions. Key components include:
- **NVIDIA GPU Liquid Cooling Market**: With shipments of systems like GB200/GB300, the related market is expected to reach RMB 69-97 billion (approximately USD 6.9-9.7 billion).
- **ASIC Chip Liquid Cooling Market**: Led by Google's TPU v7 and others, this segment is projected to add RMB 24-29 billion (approximately USD 2.4-2.9 billion) in incremental value.
- **Global Market Space**: Guohai Securities estimates the global data center liquid cooling market could reach USD 16.5 billion (approximately RMB 116.2 billion) by 2026. Huayuan Securities is even more optimistic, forecasting growth from tens to hundreds of billions.

Technical Pathways: Evolution of Mainstream Solutions and "Black Technology" Innovations

The market currently features multiple parallel technical routes to meet diverse scenario demands.
- **Cold Plate Liquid Cooling (Indirect Contact)**: The most mature and widely adopted mainstream solution, it transfers heat via plates attached to chips, requiring minimal modifications to existing server architectures and offering relatively simple deployment. It is evolving toward enhanced heat transfer technologies like "microchannels" to handle higher power consumption. Chinese innovation teams have successfully developed pump-driven two-phase cold plate liquid cooling technology with a heat dissipation capacity exceeding 2,500W, reducing PUE to below 1.10.
- **Immersion Liquid Cooling (Direct Contact)**: This approach fully submerges server equipment in dielectric cooling fluid, achieving ultimate heat dissipation and silence. Pilot projects by China Telecom show that this technology stabilizes core equipment temperatures at 38°C, 35% cooler than air cooling, with a minimum PUE of 1.1, delivering significant energy savings. Challenges include higher initial costs and operational complexity.
- **Chip-Level Liquid Cooling and Two-Phase Flow**: The technological frontier points to more aggressive integrated solutions. Microsoft has demonstrated "microfluidic cooling" technology, using AI to design bionic structures that etch hair-thin cooling channels directly into chips, claiming three times the heat dissipation efficiency of existing cold plates. This foreshadows a future where cooling is deeply integrated with chip design.

China's Opportunity: Rise of the Domestic Supply Chain and Super-Node Catalysis

China's liquid cooling industry benefits not only from global trends but also from unique structural opportunities. Under the "East Data, West Computing" initiative and strict PUE ≤ 1.15 policies, newly built data centers must adopt efficient technologies like liquid cooling. Meanwhile, surging shipments of domestic AI chips from Huawei Ascend and Hygon Information, along with their matching (supporting) compute infrastructure (e.g., Huawei's CloudMatrix 384 super-node), make liquid cooling a standard configuration, opening an incremental market for domestic vendors less reliant on overseas supply chains.

"Super-Nodes" (SuperPoDs), which integrate hundreds or even thousands of compute cards into a single unit, are becoming the mainstream form for intelligent computing centers. This highly integrated, ultra-high-power design is inherently tied to liquid cooling solutions. Domestic vendors like Huawei, Sugon, and Inspur are accelerating the standardization and scaling (large-scale) adoption of liquid cooling in China.

Faced with surging overseas demand, foreign liquid cooling vendors are cautious about capacity expansion, while Chinese suppliers demonstrate significant advantages in capacity, responsiveness, and service collaboration. Domestic advanced liquid cooling cabinet products have achieved breakthroughs like single-cabinet heat exchange exceeding 80kW and PUE as low as 1.1. This enables leading domestic vendors to not only capture orders overflowing from Taiwanese supply chains but also to serve global clients in the future.

Supply Chain Transformation: Value Reconstruction and Investment Focus

Market expansion will reshape the industrial chain, leading to new value distribution. The liquid cooling supply chain spans upstream components (cold plates, quick connectors, pumps, cooling fluids), midstream CDU/cabinet and system integration, and downstream data center users. As scale increases, vendors with key component R&D capabilities and system design/delivery experience will gain stronger bargaining power.

Investment focus in 2026 lies in "order fulfillment" and "market share growth." Prioritize companies already integrated into the supply chains of leading customers like NVIDIA, Google, and Huawei, with potential for mass production orders by H1 2026. Also, focus on high-barrier, high-value segments (e.g., microchannel cold plates, CDUs) and vendors capable of upgrading from component suppliers to full-stack system solution providers. Some second-tier companies may achieve high performance elasticity by leveraging niche expertise or cost advantages, riding the industry's beta growth.

Conclusion:

By 2026, liquid cooling will shed its auxiliary role entirely. This transformation, ignited by both bottom-up chip iterations and top-down policy design, will spawn a massive, rapidly growing emerging industry.

Online References:

36Kr Friends: "Liquid Cooling 'Black Technology': Microsoft Etches Cooling Fluid into Chips"

Smart Finance: "Western Securities: 2026 May See Accelerated Adoption of Rack-Level Liquid Cooling; Super-Nodes Expand China's Liquid Cooling Market"

Science and Technology China: "Pump-Driven Two-Phase Cold Plate Liquid Cooling Technology and Products"