Domestic fluorinated liquid breaks the monopoly and data center cooling technology ushers in changes

Fluorinated liquid has excellent performance and is the most ideal immersion cooling liquid for data centers, and is expected to bring new growth to the industry.

At the fluorine chemical industry conference held in Hangzhou, experts were unanimously optimistic about the market prospects of data center coolant. Su Qin, secretary general of the Organic Fluorine Professional Committee of the China Fluorine Silicone Organic Materials Industry Association, said that the domestic consumption of fluorinated liquids may exceed 30,000 tons in 2025 , and the market is expected to exceed 4.5 billion yuan .

As the global technology giant 3M announced that it would withdraw from the fluorinated liquid field by the end of this year, a gap appeared in the coolant market that has long been monopolized by overseas countries. This field is ushering in a critical period of domestic substitution.

01 Data Center Thermal Management Revolution

Electronic fluorinated liquid has become the core material of immersion cooling technology due to its low viscosity, non-toxicity, high electrical insulation and other characteristics. Liquid cooling technology can reduce energy loss by shortening the refrigeration chain and achieve an excellent energy-saving effect with a PUE value of less than 1.25 .

Among various liquid cooling technologies, immersion liquid cooling has more advantages than spray liquid cooling and cold plate liquid cooling in dealing with the extreme heat dissipation challenges of edge nodes. With the surge in demand for artificial intelligence computing power, traditional air cooling can no longer meet the heat dissipation needs of high-density servers, and the penetration rate of liquid cooling technology is accelerating .

Fluorocarbon and silicone coolants each have their own market share in the field of data center immersion liquid cooling, but fluorinated liquids perform better in thermal stability, oil resistance and wear resistance . Professor Zhou Lu of Nanjing University of Science and Technology emphasized that fluorine materials occupy an indispensable position in many high-performance applications due to their unique physical and chemical properties.

02 4.5 Billion Blue Ocean Market

The fluorinated liquid market is experiencing explosive growth. According to industry forecasts, by 2025, the domestic fluorinated liquid market will exceed RMB 4.5 billion. This growth is mainly driven by three aspects:

The surge in demand for artificial intelligence computing power has driven a wave of data center construction, and traditional air cooling technology can no longer meet the heat dissipation needs of high-density servers.

The national “East Data West Computing” project promotes the construction of large-scale data center clusters, puts forward higher requirements for energy-saving technologies, and the PUE value becomes a key indicator.

Precision temperature control in semiconductor manufacturing is growing, and the etching process requires an extremely high temperature stability of ±0.1°C, making fluorinated liquid the preferred cooling medium.

Currently, the mainstream products in the domestic market include three categories: hydrofluoroether, perfluoropolyether, and perfluoroolefin, and many domestic companies have achieved mass production.

03 Breakthrough in Localization of Upstream Materials

Hexafluoropropylene oxide is the core raw material of fluorinated liquids, and its production technology has long been monopolized by international giants. This compound (molecular formula C3F6O), which is a colorless gas at room temperature and pressure, has high production costs and complex processes , so there are only a handful of global manufacturers.

Chinese companies have made significant breakthroughs in this field in recent years.

The global hexafluoropropylene oxide market size is about 1.28 billion yuan in 2022, and is expected to grow to 1.5 billion yuan this year. With the expansion of downstream applications, this figure is expected to continue to rise. Recently, Jiayuan Chemical has also invested in the expansion project of fluorine-containing fine chemicals to further improve the industrial chain.

04 Refrigerant Policy Adjustment Brings New Opportunities

The fluorine chemical industry is also facing a critical node in the adjustment of refrigerant policies. According to the latest plan of the Ministry of Ecology and Environment, China's second-generation refrigerant quota will be reduced at an accelerated rate in 2025 , and the total production and use of third-generation refrigerants will remain at the baseline value.

This policy change is reshaping the market. The second-generation refrigerant R22 is mainly used in the maintenance market, and its quota reduction will drive prices to continue to rise. As for the third-generation refrigerant, driven by the demand for household air conditioners, the social inventory of R32 has decreased and the price has risen rapidly.

Zhang Jinglei, a chemical industry analyst at Donghai Securities, believes: " As the supply and demand pattern of refrigerants improves , the industry will maintain a high level of prosperity for a long time, and the profitability of related companies is expected to increase significantly." Leading fluorine chemical companies with a complete industrial chain and comprehensive infrastructure have more competitive advantages.

05 Green and High-end Transformation

As the fluorine chemical industry upgrades to high value-added areas, fluorine-containing fine chemicals are becoming the key development direction of enterprises . According to the data from the Petroleum and Chemical Industry Planning Institute, the output value of fluorine-containing fine chemicals in the United States, Western Europe and Japan will reach US$12.9 billion in 2023 , and the average annual growth rate of foreign demand for fluorine-containing pharmaceutical and pesticide intermediates will reach 4.9% in the next five years.

In the field of fluorine-containing special gases, Bai Zhanqi, a professor-level senior engineer at Hangzhou Fluorotech, pointed out that fluorine-containing electronic special gases are the main type of electronic special gases used in the pan-semiconductor industry, accounting for a large proportion. "In the future, fluorine-containing special gases will develop towards the trend of excellent performance, high purity, high cleanliness, and environmental friendliness . Only high-quality products will bring high benefits to enterprises."

The new energy sector also contains opportunities. Carbon fluoride as a positive electrode material for batteries has advantages such as high specific energy and low self-discharge rate; fluorine-containing additives can effectively improve the low-temperature performance and flame retardant properties of electrolytes. As the lithium battery market grows, the application space for related fluorine materials is broad.

The transformation of the fluorine chemical industry to high-end has become a general trend. As the fluorine material industry base continues to improve the working mechanism of "one industrial chain, one working group, one special plan, and one set of support policies", domestic fluorinated liquids are accelerating the replacement of imported products in the fields of data centers and semiconductor manufacturing.

Although the global hexafluoropropylene oxide market is small, with an estimated size of only RMB 1.5 billion in 2024, it has leveraged the downstream application value of dozens of times. In the fluorine chemical industry, Chinese companies are shifting from "following" to "running side by side", and have even achieved "leading" in some areas.

In the next few years, as international giants such as 3M withdraw from the fluorinated liquid market, domestic brands are expected to occupy a core position in data center cooling technology.