Liquid Cooling Capacity Expansion and M&A Acceleration: What Are Companies Actually Buying?

• Jetband Technology (core business: precision functional and structural components for consumer electronics) Acquired Hengju Electronics to gain supplier qualification for the supply chains of Taiwanese thermal management vendors such as AVC and Delta; • Jinfu Technology (core business: packaging products for food and beverages) Acquired Zhuohui Metal and Lianyi Thermal Energy—shifting from bottle caps to liquid cooling tubing. The acquisition targets Zhuohui Metal’s and Lianyi Thermal Energy’s technical capabilities, production capacity, and customer resources in both liquid cooling tubing and liquid cold plate assemblies. These cross-sector cases illustrate how liquid cooling is evolving from a niche segment dominated by specialized thermal management vendors into a strategically important direction attracting growing attention across diverse manufacturing sectors. 2.2 Vertical Integration: Strengthening End-to-End Capabilities Extending vertically along the value chain—upstream or downstream from core businesses—is another key logic behind M&A activity. Some companies acquire just one or two missing links; others build out entire integrated chains. Yet the strategic direction remains consistent: transitioning from single-component suppliers to providers capable of delivering subassemblies—or even full system solutions. • Kechuang Xinyuan (core business: polymer materials and thermal management systems) Acquired Dongguan Zhaokē and Singapore-based Zhike Technology to further enrich its thermal interface material product portfolio; • Suzhou Tianmai (core business: thermal conductive materials and thermal management components) Gained indirect control over Zhongleng Technology, adding liquid cooling refrigeration equipment capabilities. This move integrates its existing thermal dissipation components with temperature control systems, strengthening its end-to-end capability spanning components + equipment; • Dongyang Group (core business: fluorine chemicals and electronic new materials) Expanded from fluorinated liquids all the way to liquid cooling system integrator Herisun, and further downstream into computing power operations—establishing a complete “materials → systems → operations” value chain. This integration trend is not limited to China: globally, the liquid cooling industry is following the same path. In 2026, Ecolab acquired CoolIT Systems for USD 4.75 billion—the largest liquid cooling acquisition globally in recent years. Vertiv has also consistently strengthened its liquid cooling capabilities through acquisitions, driving consolidation of high-end technologies and customer resources toward industry leaders. 03 Industry Outlook: From Technology Competition to Capacity and Integration Competition MIR DATABANK Combining signals from both capacity expansion and M&A activity, we offer three assessments regarding the current stage of the liquid cooling industry: Beyond a few highly technical segments, overall industry bottlenecks lie in delivery capacity. How certain is demand? According to MIR DATABANK, China’s liquid-cooled server market size is projected to reach RMB 150 billion in 2026, representing an 86% year-on-year growth. The industry’s primary challenge is no longer *whether* something can be made—but *whether* it can be delivered at scale. Capacity expansion and M&A are fundamentally efforts to keep pace with delivery timelines. 2025–2028E Liquid-Cooled Server Market Size Note: Includes only liquid cooling thermal systems—not full server units—and includes exports. Source: MIR DATABANK Localization substitution is accelerating, yet progress and quality vary significantly across segments. For structural components like cold plates, domestic manufacturers have achieved mass-scale production, with numerous entrants intensifying competition. Top-tier CDU (Coolant Distribution Unit) vendors have already achieved batch deliveries for domestic projects. Conventional tubing is largely mature domestically, but high-end drip-free blind-mate quick-connectors remain dominated by overseas brands; domestic alternatives are still undergoing validation and small-batch supply. Fluorinated dielectric fluids for data centers remain in the critical phase of technology and customer certification. Low-barrier segments will grow increasingly crowded, while high-barrier segments remain scarce—industry divergence has already begun. Leading players are all extending upstream and downstream. The space for companies operating solely within a single link of the value chain will continue shrinking.

Deepening Development in China and Intensifying Layout in Pudong: Multinational Corporations Accelerate Localization

Candela entered the Waigaoqiao New Exhibition City Industrial Community in 2022, officially launching its first laser technology innovation base in China. It has since continuously expanded its industrial footprint in China: in 2024, it secured Shanghai’s first Class III medical device approval under Document No. 104 (“import-to-local-manufacturing” conversion), enabling domestic production of its M22 IPL devices. In 2026, it achieved further breakthroughs—obtaining domestic registration approvals for two next-generation high-end laser devices: the Smart 532 green-light micropulse retinal laser and the carbon dioxide laser therapy system. These milestones mark successful localization of high-end ophthalmic and surgical laser equipment, breaking long-standing reliance on imported whole units, while completing Candela’s domestic product portfolio covering ophthalmology, surgery, and aesthetic medicine. During this localization process, Waigaoqiao actively coordinated with local authorities and sector regulators to establish multi-tiered communication channels for the company, providing professional policy interpretation and implementation guidance—creating an efficient government-enterprise collaboration model. Through special industrial policy support programs offered by Pudong New Area, the company reduced its comprehensive operational costs. Under its localization strategy, the group plans to manufacture 50% of its products sold in the Chinese market locally in Waigaoqiao—shortening delivery cycles, optimizing supply chains, lowering end-user procurement costs, and simultaneously upgrading China’s upstream and downstream laser medical device industry chain, supporting high-quality development of Shanghai’s advanced medical device manufacturing sector. At the end of last year, China’s Ministry of Commerce and other agencies released the fourth batch of the Comprehensive Bonded Zone Repair Product Catalogue. Within this scope, Candela has obtained bonded repair qualifications for three types of complete medical devices; the first batch of repair items has completed entry procedures into the zone. “By leveraging Waigaoqiao’s port advantages and open policies, we have established cross-border bonded repair channels for complete medical devices across the Asia-Pacific region—forming a dual-driver business model combining domestic production of complete devices and cross-border repair of complete devices. This represents an upgrade from our previous global repair model focused solely on individual components to a comprehensive global repair model covering complete devices,” said a relevant executive at Candela. “This model enables rapid response to market demands both domestically and internationally, achieving a closed-loop industrial chain encompassing both production and after-sales service.” Accelerating the Creation of an “Innovation Brain” Empowering Global Markets Similarly grounded in localization, Ecolab has consistently increased its investment in China in recent years, comprehensively enhancing its localized R&D, manufacturing, sales, and service systems. Today, it has built a fully integrated capability system covering indigenous innovation, R&D, manufacturing, and digitalization. Recently, reporters visiting Ecolab’s Greater China R&D Center in Pudong learned that—as Ecolab’s third-largest global R&D center—it serves as both an “innovation breakthrough point” and a “technology incubator,” having generated over 100 international invention patents to date. Meanwhile, Ecolab’s innovations developed in China are now being exported to global markets.

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Ecolab Rallies 12.2% in 3 Months as High-Tech Growth Gains Momentum

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