Key Points
- The exponential growth in AI computing power, with chips like the Nvidia Blackwell B300 expected to reach 1,400W, is causing an unprecedented heat dissipation challenge that traditional air cooling (max 20-50kW/cabinet) cannot handle.
- Diamond is emerging as a critical heat dissipation material due to its extraordinary thermal conductivity, which is 5 times higher than copper and 10 times higher than aluminum. Chinese companies are making significant investments, with CVD polycrystalline diamond expected to be essential for 2nm process chips.
- Silicon Carbide (Tanhuagui 碳化硅) offers dual benefits as both a power device and a heat dissipation material. Its market for data center PSUs is projected to reach ¥102.23 billion RMB ($14.1 billion USD) by 2030, with Silicon Carbide-based high-power PSUs growing to 24% of the market.
- Chinese companies like Henan Liliang Diamond (Liliang Zuanshi 力量钻石) are strategically reallocating substantial capital (e.g., ¥1.028 billion RMB, or $142 million USD) to focus on diamond functional materials for heat dissipation.
- China holds a global leadership position in Silicon Carbide, particularly with SICC Co., Ltd. (Tianyue Xianjin 天岳先进) holding a 51.3% global market share in 8-inch conductive substrates in 2025, demonstrating a complete industrial chain.
AI computing is getting hot—literally.
As data centers scale up and AI chips become more powerful, thermal management has shifted from a nice-to-have feature to a critical bottleneck.
Chinese semiconductor companies and material manufacturers are racing to capitalize on this trend, investing heavily in diamond and silicon carbide technologies that promise to revolutionize how we cool the next generation of AI infrastructure.
The AI Heat Crisis: Why Thermal Management Matters Now
The explosion in AI computing power is creating an unprecedented cooling challenge.
Consider the numbers:
- Nvidia (Yingweida 英伟达) H100 GPUs consume approximately 700W of power
- The newer Blackwell architecture B300 chips are expected to reach close to 1,400W
- Rubin architecture chips are projected to exceed 1,500W
- Traditional data center CPUs consume less than 300W by comparison
That’s a massive jump in heat density—and traditional air cooling simply can’t handle it.
As semiconductor industry insiders point out, the exponential growth in chip power consumption, rising cabinet power density, and tightening data center PUE (Power Usage Effectiveness) standards have rendered conventional cooling solutions obsolete.
Why This Matters for AI Infrastructure
When chips overheat, the consequences are severe.
Rising junction temperatures trigger automatic hardware frequency reduction, which means significant losses in computing performance.
It can also lead to chip failure and dramatically shorten the service life of AI servers—a costly problem when you’re running billion-dollar data centers.
In modern AI server cabinets, power density has generally exceeded 120kW.
This far exceeds what traditional air cooling can handle (which maxes out at 20–50kW per cabinet), creating serious risks of localized overheating.
Meanwhile, advanced packaging techniques like chiplets and 2.5D/3D structures have made the problem worse.
When multiple chip layers are stacked vertically, heat accumulates between layers—and traditional heat dissipation structures can’t penetrate through to export that internal heat effectively.
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Enter the Wonder Materials: Diamond and Silicon Carbide
The industry is looking beyond system-level solutions (air cooling, liquid cooling, immersion cooling) and focusing on the materials themselves.
The key insight: take the heat out of the machine vs. conduct heat out from inside the chip.
For the latter, two materials are emerging as game-changers.
Diamond: The Ultimate Thermal Conductor
Diamond has extraordinary thermal properties.
Its thermal conductivity is approximately:
- 5 times higher than copper (Tong 铜)
- 10 times higher than aluminum (Lv 铝)
Xu Hongxing (徐红星), an academician of the Chinese Academy of Sciences, has stated that diamond’s extreme heat dissipation advantages could solve the thermal challenges of AI computing.
The material is expected to unlock breakthrough applications in optical-grade and chip-grade technologies.
China Galaxy Securities (Zhongguo Yinhe 中国银河) believes that as the global semiconductor industry moves into the 2nm process competition stage, CVD (Chemical Vapor Deposition) polycrystalline diamond will become an essential cooling solution.
Status update: Diamond has already entered the commercialization stage for heat dissipation substrates and heat sinks, with several companies reporting mass supply.
However, diamond power devices are still in experimental R&D phases and haven’t yet reached large-scale production.
Silicon Carbide: The Dual Opportunity Play
Silicon Carbide (Tanhuagui 碳化硅) offers a different advantage: it’s a dual-benefit material for the AI era.
It combines high voltage tolerance, high-frequency low loss, and high thermal conductivity—making it valuable both as a power device and as a heat dissipation material.
In data centers, Silicon Carbide power devices are seeing massive new applications:
- Server Power Supply Units (PSU)
- Solid State Transformers (SST)
- AI server power supply systems
The market opportunity is substantial.
Institutional forecasts suggest the data center PSU market could reach:
- ¥54.38 billion RMB ($7.5 billion USD) in 2025
- ¥102.23 billion RMB ($14.1 billion USD) by 2030
- This represents a compound annual growth rate of approximately 15.5%
Even more exciting: the proportion of high-power PSUs based on Silicon Carbide and Gallium Nitride (Jiananhua 氮化镓) will jump from just 10% in 2025 to about 24% by 2030.
That 24% slice represents approximately ¥24.53 billion RMB ($3.384 billion USD) in market value.
For Silicon Carbide as a thermal material in AI chip packaging, Hong Yuan, a senior analyst at InSemi Research, notes that the technical path is shorter, demand is more rigid, and replacement difficulty is lower compared to other applications.
Large-scale production is expected by 2028.
The challenge: Silicon Carbide as an interposer faces core bottlenecks around high processing difficulty and manufacturing costs—but these are solvable problems with the right investment.
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Chinese Companies Race to Capitalize on the “Heat Opportunity”
- Henan Liliang Diamond: ¥1.028 Billion (RMB) for Diamond Functional Materials
- Jingsheng Mechanical & Electrical: ¥861 Million (RMB) for SiC Parts and Precision Equipment
Several A-share (Chinese stock market) listed companies are aggressively expanding their positions in this emerging market.
They’re investing across the entire value chain: upstream materials, midstream device manufacturing, and downstream applications.
Henan Liliang Diamond: The Strategic Pivot
On June 10, Henan Liliang Diamond (Liliang Zuanshi 力量钻石) announced a major shift in its capital allocation strategy.
The company reallocated ¥1.028 billion RMB ($142 million USD) from its “Shangqiu Liliang Diamond Technology Center and Lab-Grown Diamond (Peiyu Zuanshi 培育钻石) Smart Factory Construction Project” into a new initiative: the “Diamond Functional Materials Production and R&D Construction Project.”
The company’s reasoning is clear:
Diamond heat dissipation materials belong to the frontier of technology and fall within the scope of policy support for original and disruptive technology breakthroughs.
Liliang Diamond is leveraging its technical reserves in HPHT (High Pressure High Temperature) and CVD diamond production, combined with regional industrial support advantages, to position itself at the forefront of this emerging industry.
The Broader Diamond Industry Landscape
Liliang Diamond isn’t alone.
Other A-share listed companies are also positioning themselves in the diamond supply chain:
- Henan Huanghe Whirlwind (Huanghe Xuanfeng 黄河旋风)
- Henan Sifangda Superhard Materials (Sifangda 四方达)
- Zhongbing Red Arrow (Zhongbing Hongjian 中兵红箭)
- Sinomach Precision Industry (Guoji Jinggong 国机精工)
- Beijing Worldia Diamond Tools (Woerde 沃尔德)
Silicon Carbide: The Global Market Leader
When it comes to Silicon Carbide, China has built a complete industrial chain.
Chinese companies currently lead globally in:
- Conductive Silicon Carbide substrate shipment volumes
- Stable mass production of 8-inch substrates
- Early-stage R&D for 12-inch substrates
Market dominance is concentrated.
According to industry survey data from Fuji Keizai (March 2026), SICC Co., Ltd. (Tianyue Xianjin 天岳先进) held a commanding 51.3% global market share in 8-inch conductive substrates in 2025—ranking first in the world.
Competitive dynamics are heating up (pun intended).
International players like Infineon and STMicroelectronics (Yishi Bandouti 意法半导体) have completed two rounds of price increases for Silicon Carbide substrates since the beginning of 2026.
Domestic Chinese manufacturers have followed suit, and industry chain companies continue expanding capacity to meet surging demand.
Jingsheng Mechanical & Electrical: Equipment Innovation
On June 4, Zhejiang Jingsheng Mechanical & Electrical (Jingsheng Jidian 晶盛机电) disclosed major strategic adjustments to its investment portfolio.
The company reallocated its funding approach for semiconductor equipment, adjusting the “12-inch Integrated Circuit Large Silicon Wafer Equipment Test Line Project” to ¥178 million RMB ($24.6 million USD).
The remaining ¥861 million RMB ($119 million USD) was redirected into two new projects:
- The “Semiconductor Equipment Precision Parts Intelligent Production Project”
- The “High-end Semiconductor Equipment (Bandouti Shebei 半导体设备) Silicon Carbide Parts Industrialization Project”
This strategic shift underscores how seriously equipment manufacturers are taking the Silicon Carbide opportunity.
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The Bottom Line: Heat Dissipation is the New Gold Rush
AI computing power is creating an unprecedented thermal challenge—and thermal challenge creates opportunity.
Materials like diamond and silicon carbide aren’t just incremental improvements; they’re fundamental enablers of the next generation of AI infrastructure.
Chinese companies have recognized this inflection point and are making substantial capital commitments to capture market share in heat dissipation materials.
For investors tracking the AI hardware supply chain, thermal materials represent a compelling long-term thesis—one that will determine whose data centers and chips stay cool enough to win the AI race.
