CICC has released a research report expressing optimism about the high growth potential of the optical communication thermal management sector, driven by the expansion of AI computing clusters, rising liquid cooling adoption rates, and new technological advancements. The firm highlights that mainland Chinese supply chains are well-positioned to capture significant opportunities, recommending attention to optical module VC (vapor chamber), liquid cooling cages, and co-packaged switch liquid cooling solutions.

Optical communication components have a strong need for liquid cooling. Core components such as lasers, modulators, driver chips, and DSPs in optical modules are highly sensitive to temperature. High temperatures not only impact device efficiency and transmission performance but can also reduce signal stability, operational lifespan, and system reliability. As optical module speeds continue to upgrade from 400G to 800G, 1.6T, and beyond, the power consumption of individual modules keeps rising. Traditional air cooling capabilities are gradually approaching their limits, making solutions like VC vapor chambers, liquid cooling cages, and switch liquid cooling increasingly important.

Optical communication liquid cooling represents a high-slope track that combines both demand growth and rising unit value. On one hand, the continuous expansion of AI computing clusters, driven by scale-out, scale-up, and scale-across architectures, fuels the demand for optical interconnect, providing a strong beta for the optical communication industry. On the other hand, as liquid cooling penetration increases and optical modules evolve toward higher speeds, new technologies such as NPO, CPO, and XPO are expected to further drive the growth of optical communication thermal management space. It is projected that the optical module VC market could reach 5.03 billion yuan by 2027, representing a year-on-year increase of 257.4%. Meanwhile, the liquid cooling cage market is set to benefit simultaneously from growth in optical module shipments, higher liquid cooling adoption, and increased value per port, offering even greater elasticity, with the market space for optical module liquid cooling cages projected at 12.5 billion yuan by 2027, up 776.5% year-on-year.

Mainland Chinese suppliers have substantial opportunities to enter the optical communication liquid cooling supply chain. In the optical module segment, mainland China's industrial chain possesses strong manufacturing and industrial cluster advantages, making it easier for domestic thermal management component makers to introduce products like VC vapor chambers and TIM materials through customer collaboration, rapid response, and cost control capabilities. In the optical module cage segment, the ecosystem is relatively open. Mainland manufacturers have already penetrated the supply chains of some overseas leading connector makers during the air cooling cage era. In the liquid cooling era, they are expected to leverage existing supply relationships and manufacturing capabilities. Moreover, optical module cages are labor-intensive products, where mainland manufacturers hold distinct advantages.

Key risks include AI capex and optical module demand falling short of expectations, slower-than-expected industrialization of new optical communication technologies, lower-than-expected liquid cooling penetration in optical modules, and shifts in liquid cooling technology routes.