The rapid rise of artificial intelligence has created a seismic shift in the need for computing power, leading to an extraordinary increase in energy consumption by data centersJust to put this into perspective, projections indicate that the energy drained by data centers in China will soar from 210 billion kilowatt-hours in 2021 to a whopping 400 billion kilowatt-hours by 2025. This will mean that, by 2025, data centers will constitute about 5.8% of the total electricity consumption in the countryThe urgency of addressing energy efficiency in data centers is becoming more critical as AI and supercomputing technologies continue to evolve.

Data center energy consumption is a multifaceted issue, primarily driven by IT equipment, cooling systems, lighting, and other ancillary structuresAmong these, optimizing cooling system energy usage stands out as one of the key strategies to reduce overall energy consumption in data centersWith the relentless increase in power density of single server racks—often exceeding limits—traditional air cooling systems are proving inadequateWhen the density surpasses 75 kW, only direct liquid cooling solutions can effectively manage the heat, making liquid cooling technology not just a relevant option but a necessary future direction.

Moreover, liquid cooling systems tend to utilize energy more efficiently compared to traditional air cooling methodsFor instance, the Power Usage Effectiveness (PUE) of air-cooled systems typically varies between 1.4 and 1.65, while liquid cooling systems can bring this figure down to below 1.25—a clear indicator of superior energy efficiency (with PUE closer to 1, the more efficient the system). Currently, three types of liquid cooling technologies are gaining traction: cold plate cooling, immersion cooling, and spray cooling.

In the present marketplace, the cold plate cooling method dominates due to its low upfront investment and relatively lower retrofitting costs—holding nearly a 90% market share in China

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Yet, as we look towards the future, immersion cooling, which presents greater technical challenges and comes with higher costs, is anticipated to have a superior cooling effect and is projected to gain more traction over time.

If we consider the landscape of liquid cooling, Infinera stands out as a formidable player in this arenaThis company has an impressive leadership team hailing from major tech firms such as Huawei and Emerson, bringing with them deep technical expertiseInfinera has strategically positioned itself by providing a comprehensive suite of cooling solutions tailored for data centers, ranging from temperature control solutions for data equipment to essential thermal management for storage and renewable energy applications.

The launch of Infinera’s end-to-end liquid cooling cabinets for computing equipment reflects a distinct advantage from a platform standpointThe production of cold plates for computing devices is commencing, with plans for bulk deliveries starting in 2025. With a solid technological backbone, Infinera has successfully amassed numerous high-profile clientele, covering the likes of China Mobile, China Unicom, and China Telecom, as well as tech giants such as Huawei, ZTE, Inspur, and several other domestic internet behemoths.

Moreover, Infinera has successfully penetrated Nvidia's supply chainCurrently, over 40 global infrastructure providers are involved in the construction and collaboration efforts surrounding Nvidia’s Blackwell platform, and Infinera is one of the significant partners in that ecosystemTo add to this robust portfolio, in July 2023, Infinera became the sole company in the liquid cooling sector to sign a memorandum of understanding with IntelBy March 2024, Infinera also emerged with the maximum bid for China Telecom's DC cabin project, underscoring its strong market credentials.

Looking at future projections, the liquid cooling data center market in China is expected to expand dramatically from 10 billion yuan to 102 billion yuan from 2022 to 2027, boasting a staggering compound annual growth rate of 58.4%. With sufficient technological reserves and a wealth of client relationships, Infinera is poised to reap the rewards of this growth trajectory.

Beyond its liquid cooling products for data centers, Infinera’s potential in the energy storage domain is equally noteworthy

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While it may not sound as glamorous as its data center pursuits, the energy storage market is experiencing notable growth worldwide, which cannot be overlookedBetween 2017 and 2023, the global installed capacity for energy storage added each year has surged at an annual growth rate exceeding 80%. Specific figures show the installed capacity reached 11 GWh in 2020, jumped to 44 GWh in 2022, and further escalated to 104 GWh in 2023—the sector is practically doubling each year.

In 2023 alone, China accounted for 51 GWh of new installations, comprising half of the global additions and demonstrating a staggering year-on-year growth rate of 221%. As the demand for renewable energy integration alongside the rising energy requirements of data centers increases, the outlook for the energy storage market continues to rise.

The competitive landscape within China's energy storage sector appears stable, with CATL leading the charge, trailed by BYD and Yiwei Lithium Energy in second and third positions, respectivelyWithin these top three companies, CATL’s lead is substantial, as it achieved nearly 80 GWh of global shipments in 2023—surpassing the combined total of Yiwei Lithium Energy and BYDCurrently, Infinera has partnered with CATL and Sungrow Power Supply, setting the stage for its energy storage thermal management business to scale up.

When compared to its competitors, Infinera offers a more comprehensive range of storage products, marking it as a significantly advantageous player in the fieldIn the thermal management of storage solutions, Shenling Environment and Highland Co. offer air-cooling and liquid-cooling systems as suppliers, respectivelyInfinera's ability to provide both solutions substantially strengthens its competitive position and facilitates securing more contracts.

Much of this success can be attributed to Infinera's significant investments in research and developmentBetween 2019 and 2023, their R&D expenditures surged from 89 million to 263 million, maintaining a rate between 6% and 8%. This puts Infinera ahead of many competitors, such as Jialitu and Highlan.

In summary, Infinera emerges as a leading force in both the data center and energy storage liquid cooling sectors in China

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