The demand has increased significantly, and the "money market" is vast. Listed companies are competing to layout the heat dissipation material industry

The "money market" of the heat dissipation industry is vast

With the advent of the 5G era, the power consumption of 5G base stations and terminals has significantly increased, and the high integration of related equipment has put forward higher performance requirements and challenges for material heat dissipation treatment technology.

It is understood that the power consumption of 5G base stations is 2 to 3 times that of 4G base stations. Higher power consumption means greater heat generation. If the base station has poor heat dissipation, it not only reduces work efficiency, but also easily causes equipment damage, downtime, and network disconnection, seriously affecting the user experience.

For the heat dissipation problem of 5G base stations, industry insiders say that many new high-efficiency devices have been introduced in the current heat dissipation scheme of 5G base stations, such as introducing the advantage of high thermal conductivity and fast cooling speed expansion plates to improve heat exchange efficiency, and the shell may use semi-solid die-casting parts with fewer internal gaps and better thermal conductivity.

How big is the market for 5G base station cooling equipment? Huajin Securities believes that the number of 5G base stations is about 1.2 to 1.5 times that of 4G base stations, and with the increase in the value of base station heat dissipation, it is expected that the domestic market size of 5G base station heat dissipation materials and devices will be about 11.5 billion yuan.

Terminal products also face new challenges brought about by heat dissipation issues. Electronic products represented by mobile phones have become thinner and shorter, and the high-performance multi-core CPU brings higher power consumption. Traditional heat dissipation methods such as shells and heat pipes can no longer meet the demand. The application of heat dissipation solutions such as heat sharing plates and graphite/graphene is expected to be further improved, and heat pipes will also develop towards ultra-thin direction.

Huajin Securities believes that the unit price of 5G mobile phone cooling components is about 3 to 4 times higher than that of 4G. With the increasing penetration rate of 5G mobile phones, it is expected that the global mobile phone cooling market size will increase from 14 billion yuan in 2019 to 22.8 billion yuan in 2022. The market size of 5G mobile phone cooling is expected to increase from 600 million yuan in 2019 to 15.5 billion yuan in 2022, with a compound annual growth rate (CAGR) of 195% from 2020 to 2022.

Breaking down into product areas such as heat dissipation plates, according to Huatai Securities' calculations, the global market size of 5G mobile phone heat dissipation plates will rapidly increase to 1.289 billion yuan, 2.803 billion yuan, and 4.332 billion yuan from 2020 to 2022; The market size of graphene thermal conductive film will reach 64 million yuan, 123 million yuan, and 173 million yuan respectively.

In addition, with the increasing demand for big data, cloud computing, and online services, the data center market will continue to grow rapidly, and the demand for electromagnetic shielding and thermal conductivity in data centers will also remain strong.

Listed companies compete to layout themselves

For the rapid growth of the heat dissipation market, Huajin Securities believes that under the background of the rise of downstream brands and the transfer of the semiconductor industry in China, domestic heat dissipation manufacturers will fully benefit from the new opportunities brought by the development of 5G and data centers, and leading manufacturers will see an increase in market share.

The latest case of layout in the field of heat dissipation materials among A-share companies is undoubtedly Science and Technology Innovation Source.

On August 28th, Sci Tech Innovation announced that the company has signed an intention agreement with natural persons such as Yue Guodong for equity acquisition and capital increase. The company intends to acquire a portion of the equity of Ruitaike and increase its capital at the same time. After the completion of this acquisition and capital increase, the company will hold no less than 55% of the equity of Ruitaike, thereby obtaining a controlling stake.

The purpose of this acquisition is to seize the development opportunities of 5G and new energy vehicles, further enrich the company's cooling product categories, and promote the implementation of the company's cooling product strategy. According to the data, Ruitaike is committed to the research and development, production, and sales of wire tube condensers, expansion evaporators, filters, heat dissipation plates, homogenization plates, and expansion liquid cooling plates, and provides corresponding solutions. The products can be widely used in communication, new energy vehicles, home appliances, LED and other fields, with customers including LG, Panasonic, Haier, ZTE Corporation (Hong Kong stock 00763), CATL and other companies.

In addition to Sci Tech Innovation, A-share companies such as Zhongshi Technology, Carbon Element Technology, and Feirongda are also actively expanding into the heat dissipation material market.

During an institutional survey, Feirongda disclosed that the company has laid out an internal and external path layout around the electromagnetic signal transmission, electromagnetic shielding, and heat dissipation solutions urgently needed for 5G communication. The company has improved the entire industry chain of base station antenna devices, components, and finished products, and has also perfected a comprehensive thermal solution for thermal conductivity, equalization, heat dissipation, and insulation. The company's thermal conductivity products include graphite sheets, heat pipes, VC (equalization plates), heat dissipation modules, and thermal conductivity silicone gel.

In the electromagnetic shielding and thermal conductivity industry, in addition to Feirongda engaged in electromagnetic shielding and thermal conductivity raw materials and processing, Anjie Technology has entered the field of electromagnetic shielding and thermal conductivity materials processing through the acquisition of Weishan Mountain. The company's subsidiary Weibo Precision is also cooperating with customers to produce 3D hot pressed plastic sheet back covers to better meet the growing demand for 3D hot pressed plastic sheet back covers in the future 5G mobile phone volume.

Carbon Element Technology and Zhongshi Technology are the main domestic manufacturers of graphite heat dissipation films.

As a pioneer in the field of graphite heat dissipation, Carbon Element Technology obtained certifications from customers such as Samsung, Huawei, OPPO, and Vivo many years ago, accumulating a good reputation and brand awareness in downstream areas. At present, Carbon Element Technology's heat pipes and heat sharing plates have been certified by several well-known domestic mobile phone manufacturers and have begun to be supplied.

Regarding the market outlook, Carbon Element Technology recently stated in its non-public offering plan that with the increase in domestic 5G mobile phone volume and the upgrading of 4G mobile phones, the demand for heat dissipation is expected to further expand from the company's existing customers. The company is also expected to continue to expand downstream markets by utilizing customer resources in the graphite heat dissipation film field, thereby bringing sustainable and growth market space for heat pipes and heat exchangers.

As a supplier of synthetic graphite heat dissipation materials for Apple, Zhongshi Technology believes that the penetration rate of VC heat dissipation solutions in high-end models of mainstream mobile phone brands will continue to increase in the future. Zhongshi Technology mainly provides product solutions to solve the basic reliability problems of electronic devices (such as heat generation, electromagnetic interference, environmental sealing, etc.). Its heat dissipation materials and products include thermal interface materials, EMI shielding materials, synthetic graphite, heat pipes/heat sharing plates, thermal modules, etc.