CITIC Securities: Diamond heat dissipation enters industrialization year one on AI chip demand

Driven by three key factors—the steeply rising power consumption of AI chips, traditional metal heat dissipation approaching physical limits, and continuous optimization of diamond preparation technology—the diamond heat dissipation industry is poised for investment opportunities marking its year one of industrialization.

We recommend positioning along two main themes: leading commercial delivery and significant capacity mass production.

• First, focus on industry leaders. Companies that are the first to achieve small-batch supply of heat sinks, self-developed equipment, and leading production capacity scale are expected to fully benefit from surging demand.
• Second, pay attention to process leaders. Companies with large-size manufacturing capabilities, full industrial chain integration, and accelerated expansion plans should be monitored.

Diamond: An Exceptional Carbon-Based Crystal

Diamond combines nature's highest hardness (Mohs hardness 10) and highest thermal conductivity (2000–2200 W/(m·K)). Its coefficient of thermal expansion aligns well with silicon and silicon carbide, catering to needs in electronics, military, and consumer electronics sectors.

Industry Analysis: AI Power Consumption Curve Rises Steeply

Taking NVIDIA's AI chips as an example, power consumption has increased from 700W in the Hopper series and 1200W in the Blackwell series to approximately 1800W in the Rubin series. Industry estimates suggest the Feynman generation will reach the 4400W level—a more than six-fold increase over four years.

The AI heat dissipation system features a hierarchical structure: chip → TIM (Thermal Interface Material) → heat spreader → cold plate → liquid cooling. As power consumption rises steeply, local heat flux density on chips has already exceeded 500W/cm² and is evolving toward 1000W/cm², making copper-to-diamond interfaces the inevitable choice for heat dissipation upgrades.

Market Size Estimation

Based on the pace of industrial ramp-up, we estimate that diamonds will gradually replace metals in covers, heat sink plates, cold plates, and optical modules for AI chips. By 2030, the global market space for diamond heat dissipation could reach 115 billion yuan, with a CAGR of approximately 143% from 2027 to 2030, indicating vast potential and high elasticity.

Player Progress: Focusing on Key Points of Industry Penetration

In 2026, diamond heat dissipation achieved the leap from sample verification to batch orders, with landmark projects from multiple companies successively landing, entering a phase of accelerated commercialization.

Current industry development efforts are focused on two areas:

• Cost side: The unit price of CVD-grade diamond wafers remains in the "gram-level" range, but the gap with copper and aluminum is narrowing rapidly due to advantages in CVD equipment and electricity costs.
• Equipment/process side: As domestic manufacturers accelerate efforts across the entire chain—from material growth to post-processing and integrated application—multiple expansion projects are expected to land densely.

Leveraging China's globally largest reserve of heat-dissipation-grade diamond production capacity and low electricity cost advantages, domestic diamond manufacturers are poised to enter a channel of rapid development.

Risk Factors

• Customer verification and BOM (Bill of Materials) introduction falling short of expectations
• Concentrated release of planned capacity
• High energy and equipment costs
• International trade and export controls
• Competition from alternative materials and technological routes

Investment Strategy

Driven by three factors—steeply rising power consumption of AI chips, traditional metal heat dissipation approaching physical limits, and continuous optimization of diamond preparation technology—the diamond heat dissipation industry is poised for investment opportunities marking its year one of industrialization.

We recommend positioning along two main themes: leading commercial delivery and significant capacity mass production.

• First, focus on industry leaders. Companies that are the first to achieve small-batch supply of heat sinks, self-developed equipment, and leading production capacity scale are expected to fully benefit from surging demand.
• Second, pay attention to process leaders. Companies with large-size manufacturing capabilities, full industrial chain integration, and accelerated expansion plans should be monitored.

(Source: Cailian Press)