Efficient heat dissipation is crucial for maintaining the performance and longevity of electronic components. Whether in consumer electronics or high-performance AI servers, the inability to manage heat effectively can lead to reduced efficiency and even damage. With the rise of AI applications, the thermal management industry has become a key focus for investors. Below we will introduce sectors of the thermal management, its technologies, and future prospects.
Introduction to the Thermal Management Industry
Evolution of Cooling Technologies
Air Cooling Technology
Air cooling has been the most common method, typically composed of three key components:
- Heat Sink: Made of materials such as aluminum or copper to increase surface area for heat dissipation.
- Heat Pipes: Utilize high thermal conductivity materials (e.g., copper) to transfer heat efficiently.
- Fans: Enhance air circulation to maximize heat exchange.
Despite its maturity, air cooling is becoming inadequate for AI servers’ growing power demands.
Sources: NVIDIA Blackwell's High Power Consumption Drives Cooling Demands; Liquid Cooling Penetration Expected to Reach 10% by Late 2024, Says TrendForce
While traditional air cooling achieves a thermal efficiency of 400-500W, newer AI server chips often require TDP capacities exceeding 700W, with some like NVIDIA’s GB200 reaching 2700W. Air cooling alone can no longer meet these demands.
TDP (Thermal Design Power): The maximum heat a component is expected to generate under standard operating conditions. Cooling systems must handle this load to prevent overheating.
Liquid Cooling Technology
Liquid cooling uses fluid as the heat transfer medium, significantly increasing TDP capacity and reducing spatial constraints. It is divided into two types: Open Loop Liquid Cooling and Immersion Liquid Cooling.
1. Open Loop Liquid Cooling
The cooling method operates on a principle similar to air cooling, but instead of using gas as the heat transfer medium, it utilizes liquid (coolant). By leveraging the high heat capacity and fluidity of liquid, the system efficiently dissipates heat. A liquid cooling system consists of cold plates, coolant, pumps, piping, and radiators. Due to its superior cooling efficiency, liquid cooling is particularly suitable for high-performance computing devices, such as AI servers and data centers.
2. Immersion Cooling
Immersion Cooling is a cooling method in which the entire server or electronic device is submerged in a specialized non-conductive coolant. The coolant must possess properties such as non-conductivity, high chemical stability, and low volatility to ensure that it maintains its characteristics even under high temperatures. Examples of such coolants include synthetic cooling liquids (e.g., 3M Novec) and perfluorinated compounds (e.g., 3M Fluorinert).
Currently, immersion cooling is primarily used in high-end servers and commercial data centers. However, due to its higher initial setup and maintenance costs compared to air cooling and open-loop liquid cooling, as well as the need for data center redesign, its adoption rate remains relatively low. Despite these challenges, immersion cooling has the potential to become a key cooling solution for future high-performance servers and data centers.
Below is the comparison chart of the three types of cooling system.
| Feature | Air Cooling | Open Loop Liquid Cooling | Immersion Cooling |
|---|---|---|---|
| Efficiency (TDP)* | 400W - 500W | ~1kW | >1kW |
| PUE Value* | 1.5 - 2.0 | 1.1 - 1.5 | <1.1 |
| Maturity | High | Medium | Low |
| Setup Cost | Low | Medium | High |
| Maintenance | Low | Moderate (coolant replacement) | High (special coolant management) |
| Space Demand | High | Medium | Low |
| Noise | High | Medium | Low |
| Use Cases | PCs, general servers | High-performance systems | High-density AI servers |
Note: The TDP and PUE values are estimates and may vary with design specifics.
Advanced Cooling Technologies
Air Cooling vs. Liquid Cooling
With the evolution of cooling technologies, alternatives like open-loop and immersion cooling outperform traditional air cooling in efficiency.
Based on the above diagram, we can see that there are two main ways to enhance total heat dissipation: upgrading cooling technology or increasing the available cooling space.
1. Cooling Technology Upgrades
As mentioned earlier, using different cooling technologies within the same space can significantly improve heat dissipation efficiency. However, transitioning to a new technology often comes with additional costs for businesses. Air cooling remains the most widely used method due to its maturity and lower implementation cost, whereas immersion cooling is a newer technology with higher setup costs, making it more suitable for servers with extreme cooling demands.
Beyond the initial setup cost, businesses also tend to prefer technologies that can be adapted to their existing infrastructure. Immersion cooling requires a complete system redesign, the introduction of coolant, and significant transition costs. As a result, it is mainly adopted in new large-scale data centers and high-end server production lines, while existing facilities are less likely to implement it directly. For existing data centers, integrating liquid cooling requires extensive modifications, leading to significant costs.
2. Expanding Cooling Space
Given these two challenges, businesses that wish to retain their existing systems may opt to increase physical space to enhance total heat dissipation. One example of this approach is 3D Vapor Chamber (3D VC) cooling technology, which utilizes spatial expansion to improve heat dissipation.
Although 3D VC manufacturers highlight its flexibility in spatial layout, meaning it does not necessarily require more space than traditional air cooling, real-world server applications suggest that height and weight tend to increase, and the overall space requirement remains larger than liquid cooling systems. Consequently, while 3D VC improves cooling, its space utilization efficiency is still relatively lower.
| Cooling Method | Air Cooling | 3D VC | Immersion Liquid Cooling |
|---|---|---|---|
| Characteristics | Mature technology, lowest setup cost | Expands and optimizes cooling space in a three-dimensional layout | Newer technology, higher setup cost |
3D Vapor Chamber (VC) Technology
3D VC (Vapor Chamber) technology offers significant advantages over traditional cooling solutions. It combines the characteristics of heat plates and heat pipes, creating a three-dimensional vacuum chamber structure that efficiently dissipates heat by leveraging the phase change of the working fluid inside the chamber.
3D VC technology can be seen as a transitional solution between air cooling and liquid cooling, offering improved heat dissipation without fully committing to a liquid-based system. Alternatively, it can also be considered a three-dimensional extension of traditional air-cooled heat sinks, optimizing spatial heat dissipation while maintaining compatibility with conventional cooling infrastructure.
A Vapor Chamber (VC) is a sealed chamber filled with a specific working fluid. When a device operates, heat generated by the source (e.g., a processor) causes the liquid inside the chamber to evaporate, forming vapor. This vapor rapidly spreads throughout the chamber, dissipating heat evenly. When the vapor reaches cooler areas, it condenses back into liquid and returns to the heat source via capillary action, completing a continuous cycle.
In three-dimensional Vapor Chamber (3D VC) technology, the working fluid undergoes constant phase change between liquid and gas, efficiently releasing heat. This not only enhances cooling performance but also enables efficient heat dissipation throughout the entire chamber, partially mitigating localized overheating issues commonly found in traditional air-cooled systems.
Beyond its space utilization advantages, 3D VC also offers cost and scalability benefits, making it one of the most mainstream cooling solutions today.
Advantages of 3D VC Cooling Technology
1. Higher Cooling Capacity for Air Cooling
According to the latest data from 3D VC technology suppliers, 3D VC can handle heat loads of 700W–800W, significantly outperforming traditional air cooling. Some manufacturers have indicated that in the future, 3D VC could push the thermal power limit to 900W–1000W, a range that traditionally required open-loop liquid cooling solutions. This advancement effectively extends the upper limit of air cooling efficiency.
2. Cost Advantage
The setup cost of liquid cooling can be up to 10 times higher than traditional air cooling, whereas 3D VC modules are only about twice the cost of conventional cooling solutions. In comparison, 3D VC offers a more cost-effective option given the current level of technological maturity, which is why it remains the preferred cooling solution for many mid-to-high-end server manufacturers.
3. Scalability and Compatibility
Due to 3D VC’s flexible spatial deployment, many existing server systems can be upgraded without requiring significant changes to infrastructure. This adaptability allows 3D VC to serve as a transitional technology, extending the lifespan of previous cooling setups. Many companies choose 3D VC over direct liquid cooling adoption due to its ability to retain compatibility with existing equipment while improving cooling performance.
Thermal Management Supply Chain
During the previous discussion, we discussed the development of cooling technologies and the latest advancements in this thermal management field. Below we will them shift our focus to Taiwan’s role in the cooling industry and its key position in the global supply chain. In the following section, we will introduce major Taiwanese players in the thermal management sector and analyze their critical contributions to global markets.
Upstream: Materials and Components
The upstream sector of the thermal management industry primarily consists of raw materials and key components suppliers. Many Taiwanese manufacturers have long been involved in thermal solutions for personal electronic devices and have recently been actively expanding into critical server components. Below is an overview of some key Taiwanese upstream players, categorized into application materials and key components:
1. Application Materials
- Delta Electronics (2308): The company is actively developing liquid cooling technology, including the research and development of specialized liquid coolants. It is expected to generate over NT$9 billion in revenue from AI cooling solutions in 2024.
- Solar Applied Materials (1785): Specializes in self-developed and in-house produced cooling fluids.
2. Key Components
- Yeh Chiang (6124): A leading supplier of heat pipes, accounting for over 90% of its revenue. In recent years, the company has aggressively expanded into non-notebook cooling markets.
- Adda (3071): Specializes in AC/DC cooling fans and small precision motors, positioning itself as one of the major suppliers of cooling fans.
- Forcecon (3483): Provides comprehensive thermal solutions, including heat pipes, vapor chambers, heat sinks, thermal modules, cold plates, and immersion cooling technology.
Midstream: Thermal Modules
Taiwan's thermal module industry is highly advanced, accounting for approximately 70% of the global thermal management market. This dominance is largely attributed to Taiwan's long-standing expertise in supplying thermal components for notebooks and personal electronics, enabling a seamless transition to high-performance cooling solutions for AI servers. Below are some of Taiwan’s key thermal module suppliers:
- Asia Vital (3017): Specializes in heat sinks, fans, radiators, thermal modules, heat exchangers, heat pipes, vapor chambers, and cold plates. Its 3D VC and liquid cooling plate technologies have received certification from Nvidia, making it an official partner supplier.
- Auras (3324): Focuses on designing and manufacturing various thermal modules, including fans, heat sinks, and heat pipes. The company is actively expanding into liquid cooling solutions for AI servers.
- Sunonwealth (2421): Renowned for its fan and thermal module production, Sunon plays a crucial role in supplying key cooling components. The company is currently developing a new product line tailored for liquid cooling systems.
- Kaori Heat (8996): Entered the server liquid cooling market, developing cooling solutions for high-power equipment, such as Direct-to-Chip (D2C) cooling and immersion cooling.
- Nidec Chaun-Choung (6230): Specializes in thermal modules, heat sinks, and heat pipes. Partnering with parent company Nidec, the company is enhancing liquid cooling applications and has successfully established a 3D VC component supply chain.
Downstream: Integration and Applications
The downstream segment of the thermal management industry encompasses various integrated applications. While personal computers (both desktops and laptops) have traditionally been the primary market, the rise of AI has significantly shifted the focus towards servers and data centers, which are now the key drivers of the cooling industry. Taiwan accounts for approximately 90% of the global server cooling capacity, making Taiwanese thermal module suppliers among the biggest beneficiaries of the growing AI computing demand.
In addition to AI servers, electric vehicles (EVs), industrial equipment, and networking devices also represent major application areas within the thermal supply chain.
Driven by the increasing AI server and chip computing power requirements, demand for advanced cooling solutions is expected to continue rising. According to Morgan Stanley, the data center cooling market is projected to generate approximately $4.8 billion in market opportunities by 2027, highlighting strong industry growth prospects and a positive market outlook for thermal management solutions.
