Qihong (3017), a major cooling manufacturer, pointed out at the conference today that it is expected that the revenue contribution related to application special integrated circuits (ASIC) will surpass the graphics processing unit (GPU) in 2027 and become an important turning point in the AI server business. As customers continue to upgrade their computing platforms, Qihong plans to expand its water-cooling production capacity by more than 50% next year and maintains a positive view on product price and shipment growth in the next few years.
Qihong pointed out that the main reason why ASIC revenue contribution will exceed that of GPU in 2027 is that large cloud service providers (CSP) have gradually increased the use of self-developed ASIC chips, driving the growth of related cooling needs. However, GPU manufacturers such as NVIDIA and AMD are still important customers. The company will continue to invest in research and development resources to jointly develop next-generation chips, systems and cabinet cooling solutions with customers. At the same time, it will actively contact emerging AI chip manufacturers to plan for future product needs in advance.
In response to the increasing cooling demand for AI servers, Qihong plans to expand water cooling production capacity by more than 50% in 2027. Chassis production capacity will also continue to increase, with production expansion still mainly in Vietnam. The company has purchased new land in Vietnam. At this stage, the land reserve is sufficient to meet subsequent expansion needs, and it will increase coolant distribution unit (CDU) related production capacity based on customer demand.
In terms of capital expenditure, Qihong estimates that this year will be about 15 billion yuan, and will increase to 15 billion to 20 billion yuan next year, which will mainly be used to expand production in Vietnam, and will also purchase equipment in China. The company pointed out that it currently has about 80 billion yuan in cash and has no relevant financing plans. It will continue to arrange production capacity and shipments according to customer needs.
In terms of technical layout, Qihong said that currently ASIC customers have introduced double-sided water-cooling boards, some GPU customers have also begun to adopt them, and related products have been delivered to customers. Due to the high complexity of the double-sided water-cooling plate design and the increased use of heat dissipation components, it helps to increase the average selling price (ASP) of the product.
It is expected that by the end of 2027, GPU and ASIC computing chips will fully develop towards liquid cooling solutions, and the adoption rate of liquid cooling of peripheral components such as CPU, memory and power supply will also gradually increase. As the architecture of AI systems becomes increasingly complex, cooling solutions have been extended from single chips to complete systems. The cooling value of products in the past few generations has shown at least a double-digit increase, and there is still room for continued growth in the future.
In response to market concerns about CSP capital expenditures being too high and AI investment realizing slower than expected, Qihong believes that for large CSPs, AI investment is not just a matter of short-term remuneration, but also a matter of long-term competitive position of the company. Judging from customer order forecasts, industry players would rather place over-orders than bear the risk of supply shortages. Even if the financing environment becomes difficult, they will still try to maintain the pace of investment. Qihong expects the growth trend of product prices and shipments to be at least from 2028 to 2029.
