CITIC Securities: Optical module temperature control is a scarce link in the AI computing power chain, focusing on three main lines

The Zhitong Finance App learned that CITIC Securities released a research report saying that with the large-scale release of 800G optical modules and 1.6T entering the first year of launch, the power consumption of a single module and the requirements for temperature control accuracy are increasing significantly, and the temperature control of the optical module is being upgraded from a “supporting link” to a “performance-determining process.” Optical module temperature control forms a three-layer system of chip-level precise temperature control (micro-TEC+ ceramic substrate heat sink), interfacial heat transfer (TIM gel/graphene gasket), and module-level heat transfer (VC hot plate/cold plate). The value of single module temperature control gradually changes systematically with the rate; the superimposed CPO/NPO architecture lowers the same domain heat dissipation between the optical engine and switching chip, and the industry ushered in a sharp rise in volume and price. In the competitive landscape, core links such as TEC and ceramic substrates have long been dominated by Japanese manufacturers. Domestic manufacturers are speeding up breakthroughs, and there is plenty of room for domestic alternatives. It is recommended to focus on three main investment segments: TEC and ceramic substrates, TIM and graphene heat transfer materials, VC heat evaporation plates and liquid cooled structural components.

CITIC Securities's main views are as follows:

The “thermostatic system” of the optical module has three layers of interlocking heat dissipation chains.

The core contradiction of optical module heat dissipation is not the absolute value of power consumption, but “too concentrated” -- devices such as DSP, laser, and TIA are integrated in a very small space, and the local heat flow density is extremely high; the wavelength of the laser drift is about 0.1 nm/℃ with temperature, and the channel spacing of the wavelength division (WDM) system is only 0.8 nm. Uncontrolled temperature will directly lead to channel crosstalk, increased error rate, and device life decay. As a result, optical module temperature control forms a three-layer system: ① chip-level precise temperature control - Micro-TEC semiconductor coolers provide ±0.1℃ constant temperature for the laser, with aluminum nitride ceramic substrates, tungsten-copper/molybdenum copper heat sink matching thermal conductivity and thermal expansion; ② interfacial thermal conductivity - TIM thermal interface materials fill the microscopic air gap between the chip, case, and VC (extremely poor air thermal conductivity). The 800g mainstream uses 8-15W/m·k thermal conductivity gel; ③ Module-level uniform heat - VC heat distribution quickly spreads out local hot spots.

Optical module liquid cooling currently has two growth logics:

Growth logic 1: AI computing power drives the volume and price of optical modules to rise sharply, and the temperature control process is amplified at the same frequency. The construction of AI clusters is driving demand for high-speed optical modules to explode, and 1.6T is expected to further rise to more than 70 million units in 2027. Temperature control is a standard part of every high-speed optical module. The demand for materials such as TEC, ceramic substrates, TIM, and VC is being released simultaneously with module shipments, and the scale of the industry has entered a high-speed expansion channel; in the 1.6T stage, the temperature control value of a single module has further increased, and the growth rate of the temperature control process is expected to continue to outperform the optical module industry itself.

Growth logic 2: High speed rates and CPO/NPO architectures drive up cooling density and accuracy requirements, and value is systematically moving upward. The heat flow density of the 1.6T module DSP, driver chip, and laser has increased significantly. The power consumption of some solutions has entered the 20-30W range. The cooling idea is “passive cooling” to “active temperature control”: the internal TIM is upgraded from 8-15W/m·k gel to 15-20W/m·k (with some diamond powder added), and is expected to further switch to graphene thermal conductive gaskets; VC heat transfer plate permeability has increased markedly, and customized solutions such as the integrated heat sharing plate (integrated design of the shell and thermal balance structure) bring additional value and price; Logic, but also quantity of value Upgraded. Under the CPO/NPO architecture, the optical engine and the switching ASIC share the same limited cooling space. High-end cooling changed from “optional” to “required”: the optical engine and shared radiator required a heat-conducting gasket or phase change material, the laser side required a ceramic substrate+heat sink+TEC, and the system side introduced VC or liquid cooling plate - the technical barriers in the temperature control process increased simultaneously with the value of the stand-alone machine.

The pattern dominated by overseas manufacturers is loosening, and domestic manufacturers have great potential.

The TEC process has been dominated by Japan's Yamato Thermomagnetics and KELK for a long time, and the domestication rate in 2023 is less than 5%. At present, the domestic manufacturer 400G/800G Micro-TEC has achieved batch delivery, and 1.6T products have entered small-batch verification. Production capacity is rapidly climbing, and the localization rate has increased to about 15%. Ceramic substrates and upstream AlN powder have been monopolized by Japan's Tokuyama, Kyocera, etc. for a long time. Currently, domestic substrate manufacturers have entered the supply chain of leading optical module manufacturers and have become the main suppliers, and some manufacturers are also speeding up sample delivery and verification in the powder process. Mainland manufacturers are leading technology in the field of TIM and graphene thermal conductive gaskets. The thermal conductivity of mass-produced products has reached 130 W/m·k, entering the supply chain of major overseas customers and promoting application in 1.6T optical modules. Referring to domestic alternative routes for other aspects of optical communication, domestic manufacturers in the temperature control sector have high certainty and flexibility in increasing their share with advantages in cost, response speed, and production capacity.

Investment Strategy:

Optical module temperature control is a scarce link in the AI computing power chain where the triple logic of “deterministic support+value shift up+domestic substitution” is superimposed. It is recommended to focus on three main investment segments:

① TEC and ceramic substrates (the core link for chip-level precise temperature control, with the highest share of Japanese manufacturers and the greatest flexibility in domestic substitution);

② TIM and graphene thermal conductive materials (1.6T/CPO/NPO driving materials are upgraded and iterated the fastest, and mainland manufacturers are leading in technology);

③ VC heating plate and liquid cooling structural components (permeability increases deterministically as power consumption increases, and extends to high-value solutions such as integrated heat sharing plates and liquid cooling cages).

Risk factors:

1) Demand for AI computing power falls short of expectations; 2) 1.6T and CPO/NPO industrialization progress falls short of expectations; 3) changes in cooling technology routes (such as the penetration of non-refrigeration solutions exceeds expectations); 4) Domestic manufacturer customer certification and mass production progress falls short of expectations; 5) Increased industry competition has put pressure on prices and gross margins.