Heat Dissipation Market Shift: From Air Cooling to Advanced 3D VC and Water Cooling

The Evolution of Cooling Fans: From PCs to AI, EVs, and IoT

In the past, cooling fans were primarily used in personal computers and laptops. However, as the PC industry has been in a long-term decline, with minimal product innovation and low entry barriers, profit margins have plummeted. For instance, a leading manufacturer once reported a quarterly gross margin as low as 1.92%, far below the typical "3-4%" margin.

Essential for AI, Electric Vehicles, and the Internet of Things

Rising Demand Driven by Specification Upgrades

Today, the cooling fan industry has made a remarkable comeback in the capital market. This resurgence is driven by the increasing need for speed and the complex computing power of chips in modern technology. Cooling solutions have become indispensable in this era, particularly for new technologies like AI, electric vehicles, the metaverse, and IoT. All these technologies share a common requirement: high-speed computing and massive data transmission, whether in devices or cloud data centers. These processes generate significant heat. For instance, typical data centers need to maintain temperatures in the range of 10 to 20 degrees Celsius, but without proper cooling, temperatures could soar above 40 degrees.

Data centers and servers, which require the most cooling fans due to their large space, have become the primary battleground for the cooling industry.

The Rising Demand for Advanced Cooling Solutions

The current market enthusiasm for cooling solutions is largely driven by the new platforms launched this year by server giants Intel and AMD, which have led to upgraded cooling specifications and increased demand for AI servers. According to a report by MarketsandMarkets, the global thermal management market is projected to reach $19.3 billion by 2028, with a compound annual growth rate (CAGR) of nearly 10%.

Interestingly, despite the server market—the most important application for cooling—expected to see a 3% decline in global shipments this year, the cooling industry continues to grow against the trend. The key lies in technological upgrades.

Air Cooling vs. Water Cooling: The Future of Thermal Management

The most common cooling method is air cooling, also known as "heatpipe cooling," which uses heat pipes or vapor chambers combined with fans to dissipate heat. The latest technological advancement in this area is the 3D VC (Vapor Chamber), which can be seen as an upgraded version of traditional cooling methods.

Another approach is the use of water cooling, or "liquid cooling," which involves water circulation for better heat dissipation, albeit at a higher cost.

"Thanks to the trend of specification upgrades, product prices have significantly increased," said Cheng Wen-Hsien, General Manager of Yuanfu Securities Investment Advisory. "Previously, air cooling or heatpipe cooling modules were priced at around $10 to $30, while 3D VC modules are 2 to 3 times more expensive. Water cooling plates are even pricier, costing several times more than 3D VC."

Zhu Yan-Min, Chairman of KGI Securities, noted that air cooling remains the mainstream in the cooling market, though water cooling has been adopted by some, albeit in smaller quantities.

Author

Professor Wei-Keng Lin

Education｜Ph.D., University of Maryland

Occupation｜Professor, National Tsing Hua University 

Specialty｜Electronic package heat dissipation, Heat pipe, Loop heat pipes(CPL，LHP，PHP), Energy-saving design, Solar heat storage and cooling, Heat flow system, Cooling of electronic components, Two-phase flow, Heat transfer elements of artificial satellite and high-altitude flying object