China's AI Liquid-Cooling Chain: Where the Real Bottlenecks Sit (and How Gree Electric Is Playing)
Executive Summary
AI compute power density has crossed the line where air cooling stops working — single racks now draw 100+ kW and NVIDIA's Rubin platform ships 100% liquid-cooled from day one (2026 production). The economic rents in the chain do not sit in the systems: they concentrate in two upstream pinch-points — electronic fluorinated coolant (the "blood" of immersion cooling, with global supply contracting after 3M's PFAS exit) and UQD quick-disconnect couplings (the "joints," locked in by multi-year customer certification). On China's A-share, the cleanest exposures are Capchem / 新宙邦 (300037, fluorinated coolant), AVIC Optoelectronics / 中航光电 (002179, UQD) and Envicool / 英维克 (002837, NPN Tier-1 liquid-cooling system). Gree Electric (000651) and DunAn Environment (002011) emerge as the "manufacturing-coalition" play — watch the ¥3 billion synergy commitment and the "Ice Cube" magnetic-levitation CDU roll-out through 2026Q4.
Background — Why Liquid Cooling Stopped Being Optional
For most of the air-cooling era, a dense rack drew 10–20 kW and heat could be carried away with fans. That picture is gone. NVIDIA's Rubin platform, which entered mass production in 2026, ships 100% liquid-cooled; Google's TPU roadmap is on the same line; the largest Chinese AIDC (AI Data Center) builds are spec'ing single-rack densities above 100 kW. Industry coverage in mid-2026 cites forecasts that the global liquid-cooling market reaches roughly $31 billion by 2030, and that global AI infrastructure capex (capital expenditure) passes $1 trillion by 2029 — research projections, not realised figures.
Glossary: PUE (Power Usage Effectiveness) is a measure of how much total facility power is used by IT equipment — 1.0 is theoretical perfection, 1.5 was the air-cooled norm; immersion cooling submerges servers in a dielectric (electrically insulating) coolant, while cold-plate cooling routes liquid through metal plates pressed against the chips.
The Chain at a Glance — Three Layers, Two Pinch-Points
A reader-friendly way to picture the value chain:
| Layer | What it does | Representative Chinese names |
|---|---|---|
| Upstream — materials & high-certification parts | Coolant, cold plates, compressors, valves, quick-disconnects — the "blood, joints, and heart" of the loop. | Capchem (300037), Juhua (600160), AVIC Optoelectronics (002179), Dingtong (688668), Qiangrui (301128), DunAn (002011), Sanhua (002050) |
| Midstream — CDU, cold plates, system integration | Turns upstream parts into a Coolant Distribution Unit (CDU), cold-plate modules and full liquid-cooling cabinets. | Envicool (002837), Shenling (301018), Tongfei (300990), KEHUA (002335), GaoLan (300499) |
| Downstream — data centers, super-computing, liquid-cooled EV supercharging | Hyperscalers, telco clouds, sovereign compute, AI server OEMs. | Foxconn Industrial Internet / FII (601138), Sugon (Shuguang) DC business |
Midstream gets the press; upstream gets the rent. Two upstream layers have true supply elasticity of less than six months, which is what we look for in a bottleneck.
Bottleneck #1 — Electronic Fluorinated Coolant (S1)
Immersion cooling submerges servers in a fluorinated dielectric fluid — the coolant is consumed, replenished, and recycled continuously, much like engine oil in a car. When 3M announced its exit from PFAS-based production (PFAS — per- and polyfluoroalkyl substances — a class of long-lasting "forever chemicals" facing global regulation), global supply contracted and a window opened for Chinese suppliers. Capchem (300037) is the cleanest A-share play: it confirmed in May 2026 that its fluorinated-coolant capacity is 5,500 tonnes/year, and in July 2026 that its fluorinated products supply both semiconductor process cooling and data-center immersion cooling. Media coverage in June 2026 called it the share leader — treat as Medium-credibility until the company confirms a number in a periodic disclosure.
Bottleneck #2 — UQD Quick-Disconnect Couplings (S1)
A UQD (Universal Quick Disconnect) is the sealed joint that lets a rack's cold-plate loop be plugged in and pulled out in seconds. Once a customer certifies a UQD on its rack platform, switching suppliers means re-running pressure-cycle, leak and EMC (electromagnetic compatibility) tests — a multi-year process. That is why AVL (Approved Vendor List) status is the moat. AVIC Optoelectronics (002179), a military/space-grade connector house with 2025 liquid-cooling solutions revenue of ¥1.785 billion (+9.25% YoY), is the most credible China candidate; Dingtong (688668) and Qiangrui (301128) are the next-tier challengers. Chinese vendors are catching up on certification, but the substitution curve is the story to watch.
Where the A-Share Money Goes — An Evidence-Graded Map
Twenty China-listed names show up in the liquid-cooling discussion. We graded each on (a) what part of the chain it actually touches, (b) the public evidence behind that claim, and (c) how much of its 2025 revenue comes from that line. All market data are 2026-08-07 close; financials are 2025 annual reports.
| Company | Layer | 2025 revenue (liquid-cooling line) | 2026-08-07 close | Evidence | Evidence rating |
|---|---|---|---|---|---|
| Capchem / 新宙邦 (300037) | Coolant | Organic-fluorine chemicals ¥1.43B (14.8% of total); 5,500 t/yr coolant capacity | ¥66.80 / PE 37.4 / mkt cap ¥504B | 5,500 t capacity confirmed (company interaction, May 2026); data-center immersion-cooling application confirmed (IR, Jul 2026) | High |
| AVIC Optoelectronics / 中航光电 (002179) | UQD / fluid connectors | Liquid-cooling solutions & other ¥1.79B (+9.25% YoY) | ¥35.46 / PE 38.8 / ¥745B | FY2025 segment disclosure; military/space pedigree; AVL progression not yet disclosed publicly | Medium |
| Envicool / 英维克 (002837) | CDU / system integrator | Data-room thermal control ¥3.45B (+41.28% YoY, 57% of revenue); Q1 2026 ¥1.18B | ¥55.90 / PE 147.6 / ¥712B | NVIDIA NPN Tier-1 certification (media disclosure, May 2026) — described as the only Chinese liquid-cooling system supplier on the list | Medium |
| Shenling / 申菱 (301018) | CDU / cold plate / Manifold | Full product line; FY2025 revenue ¥4.21B | ¥86.68 / PE 169.9 / ¥324B | FY2025 segment & product disclosures | High |
| Tongfei / 同飞 (300990) | Industrial liquid thermostatic equipment | Liquid thermostatic ¥2.03B (+38.73% YoY, 71% of revenue); overseas ¥-rev +269.9% | ¥73.85 / PE 50.4 / ¥126B | FY2025 segment & overseas disclosures | High |
| DunAn / 盾安 (002011) | Refrigeration valves (global #1 stop valve; #2 four-way / electronic expansion valve) | FY2025 revenue ¥13.04B; net ¥1.08B; global HVAC-component share ~26% | ¥10.35 / PE 10.5 / ¥111B | Global share disclosed; Gree ¥3B FY2026 related-party sales plan (Shenzhen Commercial Press, May 2026) | Medium |
| Dingtong / 鼎通 (688668) | Connectors / CAGE / liquid-cooling structural parts | Connectors ¥1.46B (+56.19% YoY, 92% of revenue); comms connector module ¥973M | ¥247.90 / PE 111.8 / ¥345B | FY2025 segment disclosures; specific NVIDIA/Rubin nomination not disclosed publicly | Medium |
| Qiangrui / 强瑞 (301128) | Heatsinks / UQD-adjacent | Heatsinks ¥284M (+45.79% YoY, 16% of revenue) | ¥114.33 / PE 114.7 / ¥166B | FY2025 segment disclosure | High |
| Juhua / 巨化 (600160) | Fluorochemicals (Juxin coolant) | FY2025 revenue ¥26.99B; net ¥3.78B | ¥43.29 / PE 28.2 / ¥1,169B | Juxin coolant line disclosed at investor day (Jun 2026); share of coolant in total revenue not separately broken out | Medium |
| Gree Electric / 格力电器 (000651) | AIDC liquid-cooling solution (new line) | FY2025 total revenue ¥170.4B; manufacturing segment ¥153.78B (−9.39% YoY); consumer appliances ¥133.06B | ¥40.10 / PE 7.7 / ¥2,246B / div yield 7.46% | "Ice Cube" magnetic-levitation CDU launch (CIIF 2026-06-22); China Unicom order >¥200M (Kuaikeji, Jun 2026); ¥3B FY2026 DunAn synergy plan | Medium |
Two honest caveats. First, several liquid-cooling names trade at PE 100–170× (Envicool, Shenling, Dingtong, Qiangrui) — the market has already priced a large chunk of the growth. Second, for the second-tier system integrators and the new entrants, "liquid-cooling revenue" is often a segment line that mixes data-center work with industrial thermostatic, EV supercharging and power-electronics cooling; read the segment footnotes, not the headlines.
This Week's Gree CNC Angle — Gree Electric & DunAn as the "Manufacturing Coalition"
For readers who follow this site for its CNC angle, the most useful way to think about Gree Electric (000651) is as the parent group that already owns the building blocks needed to credibly enter the AIDC liquid-cooling business: magnetic-levitation compressors (already a global chiller leader via Gree Central Air), refrigeration valves (via its controlling stake in DunAn Environment / 002011), and the precision-manufacturing muscle that lives in the same factory network that produces Gree CNC spindles and linear motors. Three concrete signals anchor the thesis today:
- "Ice Cube" magnetic-levitation CDU, PUE 1.1. Launched at CIIF 2026-06-22 as part of an "AIDC full-scenario liquid-cooling solution" (media report, C-level evidence).
- China Unicom maximum-share order, >¥200 M. Reported on 2026-06-17 (Kuaikeji); primarily a central-air-conditioning order that includes cooling capacity, with liquid-cooling relevance evolving (B-level evidence).
- DunAn ¥3 billion FY2026 related-party sales plan. Shenzhen Commercial Press, 2026-05-14 (B-level evidence). The plan is between DunAn and the Gree group, not all of it liquid-cooling, but it is the most concrete quantification of the coalition so far.
Two honest flags for the "Gree liquid-cooling" narrative. (i) Liquid-cooling revenue is not separately disclosed in Gree Electric's 2025 segment reporting — we cannot yet quote a number we are willing to defend. The thesis is therefore a manufacturing-coalition one, not a verified-revenue one. (ii) Gree Central Air's win at China Unicom is real, but it sits closer to HVAC-plus-cooling than to pure immersion or cold-plate AIDC work — the pure-play AIDC liquid-cooling award we are watching for is a 2026Q4 milestone, not a Q1 one.
For the broader CNC readership here, the take-away is that liquid cooling is now a strategic second growth-pole for the parent group, not just a CN-power-tools crossover — and that the same factory-base that produces precision spindles and direct-drive rotaries for the CNC line is the credible industrial substrate behind the AIDC push. Treat the ¥3 billion synergy and a 2026Q4 liquid-cooling-specific order/award as the triggers that move Gree from "manufacturing-coalition" to "verified-revenue" in this segment.
Data Credibility Rating
| Claim | Rating | Basis |
|---|---|---|
| NVIDIA Rubin 100% liquid cooling from 2026 production | High | Multiple independent media reports (Jun 2026) |
| 3M exit from PFAS-based semiconductor coolant production | High | 3M company announcements (2024) |
| Global liquid-cooling market to reach ~$31B by 2030 | Medium | Industry projection (research note); not realised figures |
| Capchem 5,500 t/yr coolant capacity | High | Company investor interaction (May 2026) |
| Capchem "share leader" in fluorinated coolant | Medium | Single media report (Jun 2026); no company confirmation |
| Envicool NPN Tier-1 certification by NVIDIA | Medium | Media disclosure (May 2026); NVIDIA has not publicly listed all Tier-1 names |
| AVIC Optoelectronics FY2025 liquid-cooling segment ¥1.785B (+9.25%) | High | FY2025 annual report |
| Gree Electric "Ice Cube" CDU PUE 1.1 | Medium | Company statement at CIIF 2026-06-22; not independently benchmarked |
| China Unicom order >¥200M, maximum share to Gree Central Air | Medium | Media report (Kuaikeji, 2026-06-17); contract specifics not publicly itemised |
| DunAn FY2026 ¥3B related-party sales plan with Gree | Medium | Shenzhen Commercial Press (May 2026); plan, not delivered revenue |
| All 2026-08-07 market data (price, PE, market cap) | High | Exchange close; from westock-data |
Outlook & Implications
Four threads to watch into the end of 2026:
- Coolant supply: Capchem's 5,500 t capacity needs to be confirmed as fully booked through 2026Q4; if it isn't, the "3M-exit" thesis is weaker than it looks.
- UQD certification: look for a Chinese UQD supplier to publicly announce a Tier-1 NVIDIA NPN or hyperscaler AVL win before year-end — AVIC Optoelectronics is the most credible candidate, but the announcement cadence is what moves the stock, not the segment disclosure.
- System integrators: Envicool's Q1 2026 revenue was ¥1.18B; the trend into Q2-Q3 is what confirms whether 2025's +32% growth was a one-off or a new run-rate.
- Gree Electric + DunAn: the cleanest read-throughs are (a) the ¥3B synergy landing on 2026 results, and (b) a 2026Q4 liquid-cooling-specific award or a separately-disclosed liquid-cooling revenue line. Either turns the thesis from "manufacturing coalition" into "verified revenue."
For overseas buyers, the most useful single sentence: upstream coolant and quick-disconnects are the rent-bearing parts of the China AIDC chain today; midstream system integrators are interesting but already richly priced.
Sources & References
- Neodata financial search — 2025 annual report data for Capchem (300037), AVIC Optoelectronics (002179), Envicool (002837), Shenling (301018), Tongfei (300990), DunAn (002011), Juhua (600160), Gree Electric (000651), Dingtong (688668), Qiangrui (301128) — accessed August 2026
- Westock-data — 2026-08-07 close price, PE, market cap for all names above — accessed August 2026
- Research note — "Liquid cooling industry: at the inflection point, a thousand-billion blue ocean sets sail" — internal research note (2026-07-28)
- Research note — "Vera Rubin 100% liquid cooling; domestic quick-disconnect market competitiveness rising" — internal research note (2026-07-07)
- News — "3M exits PFAS semiconductor-coolant market; Capchem share leader; liquid-cooling market to $31B by 2030" — 2026-06-23
- News — "Envicool awarded NVIDIA NPN Tier-1 certification — sole Chinese liquid-cooling system supplier" — 2026-05-27
- News — "Gree Electric + DunAn to advance AI data-center liquid-cooling; FY2026 sales to reach ¥3B" — Shenzhen Commercial Press, 2026-05-14
- News — "Gree Central Air wins maximum-share China Unicom order, >¥200M" — Kuaikeji, 2026-06-17
- News — "Gree launches Ice Cube magnetic-levitation CDU at CIIF 2026" — 2026-06-22
- News — "Capchem confirms 5,500 t/year fluorinated-coolant capacity" — 2026-05-08
- News — "Capchem fluorinated products supplied to semiconductor process and data-center immersion cooling" — 2026-07-02