Liquid Cooling: The Most Deterministic "Water Seller" in the AI Compute Arms Race
Liquid cooling is the most deterministic "water seller" segment in the AI compute infrastructure chain. Whether it is NVIDIA GB300 or Huawei Ascend, Alibaba's $80 billion AI investment or Xiaomi's AI chip, the only certain beneficiary of the compute arms race is thermal management. Chip power consumption rises 50–100% per generation, and liquid cooling penetration has surged from 15% in 2024 to an expected 45%+ in 2026. Cold plate liquid cooling is the current mainstream, and the liquid cooling distribution unit, or CDU, is the single highest-value component. Per-rack liquid cooling solution value is approximately 300,000–500,000 RMB/MW for cold plate and 800,000–1.2 million RMB/MW for immersion. The CDU accounts for 25–30% of system value, cold plate assemblies 15–20%, and liquid cooling pumps 8–12%.
The second half of 2026 is a concentrated window for liquid cooling order release. Three signals resonate toward Q3–Q4 order acceleration: Alibaba's $80 billion AI investment with nearly 3x oversubscribed placement, Xiaomi's AI chip launch, and industry players explicitly stating H2 liquid cooling order ramp-up. The core industry logic is clear: AI chip power follows A100 (400W) to H100 (700W) to B200/GB200 (1000–1200W) to GB300 (1400–1800W) to Rubin (expected 2000W+). With single-chip air cooling limited to approximately 800W, GB200's 1200W already breaks this threshold, making liquid cooling mandatory rather than optional. This is why AI data center thermal management has shifted from a nice-to-have to a critical infrastructure requirement.
Three liquid cooling technology routes exist: cold plate liquid cooling with approximately 80% market share, immersion with around 10%, and spray with about 5%. Cold plate liquid cooling is the absolute mainstream for 2025–2027 due to compatibility with existing data center architecture, low retrofit costs, and mature supply chains. Immersion is the long-term direction for 2027 and beyond, awaiting coolant cost declines and rack standardization. For the AI server air liquid cooling CDU, this means cold plate-compatible designs will dominate near-term demand, with the CDU serving as the bridge between the facility cooling loop and server-side cold plates.
The industry value chain breakdown for a 50MW cold plate liquid cooling deployment reveals where value concentrates. Thermal system integration accounts for 150,000–180,000 RMB per rack, or 30–35% of system value, with 30–40% gross margins driven by system design and customer relationships. The CDU accounts for 50,000–80,000 RMB, or 10–15%, with 35–50% gross margins, the highest in the chain, driven by heat exchange efficiency and reliability. Cold plate assemblies are 30,000–50,000 RMB, pumps 20,000–30,000 RMB, and coolant 10,000–20,000 RMB. A high efficiency air liquid cooling CDU commands premium margins because its heat exchange performance directly determines whether high-power racks can operate within safe temperature limits.
Elasticity calculations show that assuming 50GW of new domestic AI compute installations in 2026 and liquid cooling penetration rising from approximately 35% to 45%, the 10 percentage point increment equals 5GW of new liquid cooling demand, corresponding to an incremental market of approximately 15–25 billion RMB. The elasticity ranking is CDU and cold plates at 2.5–3.5x, thermal system integration at 2.0–3.0x, liquid cooling pumps at 1.5–2.5x, and coolant at 1.5–2.0x. As data centers move closer to office and residential areas, a low noise air liquid CDU becomes an increasingly important selection criterion, with pump and fan noise reduction directly affecting deployment feasibility in urban locations.
The liquid cooling thermal sector is currently in a transition from theme concept to order verification, corresponding to ignition to fermentation stages in the thematic lifecycle. This week, liquid cooling server concepts surged across the board, with multiple stocks rising over 10% and significantly expanded trading volume. Catalysts came from three directions: Alibaba's oversubscribed AI investment, Xiaomi's large model AI chip, and industry confirmation of H2 order ramp-up. However, Q1 2026 results are generally still in the investment phase with R&D, capacity building, and customer validation, and revenue has not yet scaled. Q3–Q4 is the verification window. An energy saving air liquid cooling CDU that can demonstrate both order conversion and power usage effectiveness improvement will be best positioned for the inflection point.
Short-term disturbances and risks warrant attention. On sentiment, after a full-sector surge, short-term differentiation risk is typical, with core names staying strong and peripheral names pulling back in T+1 to T+3. On performance, Q1 results are broadly weak with the inflection expected in Q3–Q4. On competition, Huawei Ascend servers come with self-developed liquid cooling, and leading cloud vendors may develop in-house thermal management, potentially capping third-party supplier share. On technology, if immersion liquid cooling breakthroughs occur with sharp fluorinated fluid cost declines, cold plate solutions could be skipped, stranding current supplier capacity investments. For the data center coolant CDU, these risks mean suppliers must maintain flexibility across both cold plate and emerging immersion architectures.
Key follow-up tracking points include NVIDIA GB300 mass production shipment progress in early September, the starting point for liquid cooling supply chain order confirmation; Alibaba, ByteDance, and Tencent AI compute tenders in September–October, the largest domestic order catalyst; liquid cooling company Q3 reports in October for order-to-revenue conversion verification; copper and aluminum price trends affecting cold plate and piping gross margins; and data center PUE policy, where stricter regulations accelerate liquid cooling penetration. The server liquid cooling distribution unit sits at the center of all these catalysts, as every order, every policy shift, and every technology transition ultimately flows through the CDU as the core distribution device of the liquid cooling system.
EXTRCOOL provides a full liquid cooling setup featuring CDUs, cold plates, manifolds, and piping. You can select ready made units or have them customized for your site. Our technology delivers strong heat extraction, energy savings, and lower carbon emissions. It performs reliably at gigawatt capacity in global data centers. For cooling you can count on, choose EXTRCOOL.
View all options or get a custom quote at: https://www.extrcool.com
