Critical Components in Data Centers Are in Short Supply, Creating Opportunities for Manufacturing of UQDs

 

As the information age advances, coupled with the widespread adoption of emerging technologies such as AI, IoT, and smart vehicles, the demand for data centers is rapidly increasing. Servers, which develop in parallel with data centers, are requiring increasingly stringent temperature control, driving the growth of liquid cooling. Among these, UQD (Universal Quick Disconnect) has become one of the most critical components in the liquid cooling systems of AI servers.

 

▲ Emerging technologies like AI, IoT

 

Recently, market reports have indicated that with the rapid increase in demand, the production of UQDs has not kept pace, which in turn is slowing down the production of NVIDIA AI servers and Tesla's xAI. In other words, the production capacity of these products is entirely dependent on the output of UQDs. Coincidentally, many Chinese companies have been deeply involved in the UQD field for years, suggesting that opportunities for domestically produced UQDs may be on the horizon.

 

 

I UQD Shortage Leads to Price Surge as Manufacturers Halt Quotes

 

In 2011, Facebook (now Meta), along with Intel, Rackspace, Goldman Sachs, and Arista Networks, launched an open collaborative project known as OCP (Open Compute Project). The goal was to drive the development of the data center hardware ecosystem through open-source hardware and software design, improving efficiency and reducing costs.

 

As part of this initiative, Intel proposed the development of an open standard aimed at providing a leak-free quick-connect solution for data center liquid cooling systems, a standard known as UQD. Specifically, UQD is a quick disconnect coupling in liquid cooling systems, designed for use in data center liquid cooling systems. With more and more connectors adhering to OCP's open standards, interoperability and compatibility between different suppliers have been ensured, fostering innovation and standardization within the industry.

 

At the same time, effective thermal management has become crucial to maintaining the normal operation of equipment and extending its lifespan. Traditional air cooling methods may no longer suffice in the face of high-power density equipment, making liquid cooling an increasingly preferred solution.

 

Compared to other connectors, UQD provides a safe, leak-free connection that supports high-flow, low-resistance liquid cooling, which is key to the efficient operation and maintenance of data centers. It's worth noting that UQD connectors support hot-swapping, meaning they can be connected or disconnected without shutting down the system-an important feature for data centers that require 24/7 uninterrupted operation.

 

▲ UQD quick disconnect coupling in liquid cooling systems for data centers

 

However, according to a recent report from Digitimes, liquid-cooled AI servers are beginning to face shipping bottlenecks due to tight UQD supply. For example, NVIDIA's Blackwell GB200 servers may not enter mass production until late 2024 or 2025. According to an ODM server company, the penetration rate of liquid cooling is steadily increasing, and as shipments of NVIDIA's Blackwell series chips rise, the market's willingness to adopt liquid cooling will also increase.

 

▲ AI server

 

Currently, most mainstream suppliers in the market are from Europe and the United States, such as Parker Hannifin (USA), CPC (USA), Eaton (USA), Festo (Germany), Stäubli (Switzerland), Danfoss (Denmark), and CEJN (Sweden). In addition, major connector manufacturers in Taiwan, such as Lotes, are actively expanding into this field and have already submitted relevant product samples.

 

Because the primary concern with liquid cooling is preventing leaks, the requirements for connectors are extremely high, making UQD the most supply-constrained component in liquid cooling systems. Industry insiders reveal that most UQD manufacturers have patent protection and must obtain multiple certifications, including CPO certification and client certification, all of which take time. However, current European and American manufacturers are unwilling to expand production, leading to UQD output becoming the main bottleneck in the rapid development of liquid cooling.

 

According to Charles Liang, founder of Supermicro, liquid cooling accounted for only 1% of the server market in the past 30 years, but he estimates that the penetration rate will rise to 30% by 2025, highlighting the rapid growth of liquid cooling. Due to the product shortage, the current market price of UQDs has reached around 200-1000 RMB, a multiple increase from previous prices, with many manufacturers even halting quotes altogether.

 

 

II Major Opportunity for Connector Manufacturers

 

From the product perspective, UQD is a liquid inlet/outlet connector used to connect the manifold and cold plate. Typically, a manifold and server each have one UQD that pair together, with the technical challenge primarily being to prevent leakage. Generally, the number of UQDs corresponds to the number of servers on a 1:1 basis, meaning that one liquid-cooled server is matched with one pair of UQDs. As high-power server shipments increase in the future, the usage of UQDs is expected to continue to rise. According to RationalStat, the UQD market is projected to reach $3.3 billion by 2030.

 

Market research firm Global Market Insights predicts that the global data center liquid cooling market will grow from $2.1 billion in 2022 to $12.2 billion by 2032. Many industry experts believe that the UQD market is expected to be larger than that of CPO, and due to its critical role in liquid cooling systems, the urgency of its market demand is also very high.

 

The good news is that many Chinese companies have already begun to establish themselves in the UQD market. For example, Qiangrui Technology applied for a UQD patent as early as 2022. According to the latest institutional research, the company has reported rapid growth in the liquid cooling testing equipment field in recent years.

 

Qiangrui Technology provides test-related jigs, equipment, and supporting parts to server customers. The price of the company's liquid cooling testing equipment varies from 200,000 to 500,000 RMB depending on functional requirements. In addition to testing equipment, the company also provides quick connectors, loading and unloading products, and other accessories on the production line.

 

Glenair recently responded publicly that it is committed to the server liquid cooling business, with products covering server liquid cooling plates, fluid connection components, various models and different heat exchange forms of CDUs, tanks, and heat exchange units of different sizes and power levels. The company's customers are primarily leading internet companies.

Invek is also one of the providers of liquid cooling system solutions, including UQDs for liquid cooling systems.

 

They have mass production capabilities and have established a market presence. Invek's UQD, manifold, cold plate, long-lasting liquid cooling medium, and leak detection products in their Coolinside liquid cooling full-chain solution have been recognized by some mainstream computing chip manufacturers and leading computing equipment manufacturers, leading to large-scale procurement applications.

 

In addition, other companies like China Aviation Optical-Electrical Technology, Nuotong, and JAZZ Terminal also offer UQDs for liquid cooling systems. Clearly, domestic companies are actively participating in UQD connector technological innovations to meet international standards such as OCP.

 

From a standards perspective, domestic connectors currently adhere to a unified standard, while overseas connectors mainly follow the OCP standard. Besides standard certification, manufacturers must also undergo vendor verification, which requires a lengthy process. According to the procurement practices of server companies, even after achieving unified certification, procurement tends to favor a single supplier, with little adoption of connectors from multiple suppliers.

 

▲ OCP (Open Compute Project)

 

Therefore, the production capacity constraints of foreign manufacturers may present domestic suppliers with a critical window of opportunity to break into the global server market. This could significantly enhance their profitability in the short term. More importantly, for domestic companies capable of rapidly responding to market changes and delivering high-quality UQD products, this UQD shortage could be a chance to elevate their position in the market.

 

 

III Conclusion

 

With the rapid development of liquid cooling technology in data centers and high-performance computing, the resulting high demand for critical components like UQDs, coupled with the increasing market acceptance of liquid cooling solutions, means that the supply issues of UQD connectors may continue to impact production and delivery cycles across related industries. This presents a major advantage for domestic companies, not only potentially boosting profitability in the short term but also helping to push Chinese-made UQDs onto the international stage. Of course, these companies must also ensure product quality while actively responding to market changes to achieve sustainable development.