Founder Securities: Infrastructure intensification drives the expansion of the coal-fired power market, and the localization process welcomes leapfrog opportunities

According to the Zhitong Finance APP, Founder Securities has released a research report stating that the relevant infrastructure industry chain is expected to benefit significantly from the intensive construction cycle of AIDC. With the continuous growth of AIDC investment, it is estimated that the market size of AIDC diesel power generation will increase from 8.6 billion yuan in 2024 to over 40 billion yuan by 2027, with an average annual growth rate exceeding 68%. There is a significant gap in the domestic supply of qualified 2MW high-power diesel generators, and domestic manufacturers are expected to rapidly increase their market share due to their comprehensive advantages. In addition, core components will become key to capacity assurance and cost reduction, and it is recommended to pay attention to key component companies that are experiencing tight supply and are accelerating their entry into the supply chains of leading customers.

Founder Securities' main points are as follows:

Continuous empowerment of AIDC investment, infrastructure industry chain enters a growth fast lane

Since the launch of ChatGPT at the end of 2022, which triggered a boom in large model training, domestic internet companies represented by ByteDance, Alibaba, Tencent, Baidu, and Huawei have quickly followed suit, driving a surge in demand for intelligent computing centers, with investment focus shifting from traditional computing to intelligent computing. In 2024, the investment scale of China's intelligent computing centers has exceeded 187.5 billion yuan, and from 2025 onwards, leading companies will continue to increase their investments, with the overall scale expected to reach 482.6 billion yuan by 2027. The relevant infrastructure industry chain is expected to benefit significantly from the intensive construction cycle of AIDC.

Rigid configuration of intelligent computing centers, diesel generator units enter a golden period of expansion

Data centers generally adopt a power supply architecture of "grid power + UPS + diesel generator units," where UPS provides millisecond-level switching to cope with short-term interruptions, while diesel generator units provide long-term continuous power supply. The two functions complement each other and together form the core backup power assurance for the stable operation of data centers. The current design specifications in China mainly follow the "Data Center Design Specification GB50174-2017," in which diesel generator units are a mandatory redundant backup power source. The value of diesel generator units used in high-end data centers is high, accounting for about 7%-10% of the overall CAPEX. With the continuous growth of AIDC investment, it is expected that the market size of AIDC diesel power generation will increase from 8.6 billion yuan in 2024 to over 40 billion yuan by 2027, with an average annual growth rate exceeding 68%.

Supply-demand resonance accelerates domestic substitution, local manufacturers welcome opportunities for market share leap

The high-end data center diesel generator unit market is still dominated by foreign brands, with Cummins, MTU, and Caterpillar collectively holding about 65% of the market share, while domestic OEM manufacturers generally hold less than 10%. The market has high barriers to entry, but domestic brands have significant price advantages and excel in delivery flexibility and capacity response. In addition, there is a significant gap in the domestic supply of qualified 2MW high-power diesel generators. The global AI development has intensified the supply bottleneck of imported units, leading to extended overseas delivery cycles, while domestic manufacturers can meet delivery periods of less than one year. Domestic manufacturers are expected to rapidly increase their market share due to their comprehensive advantages.

Grasping the heart of diesel power generation, high-power engines and components become self-controllable and accelerate

High-power engines are the core cost item of diesel generator units, accounting for over 60% of the BOM. Currently, this field is dominated by three foreign companies: Cummins, MTU, and Caterpillar, which together hold over 75% of the market share. During the downstream high prosperity cycle, OEM manufacturers have an urgent need for cost control, and domestic engines are priced 15%-30% lower than foreign brands, which is expected to accelerate the substitution process. Leading domestic companies such as Weichai and Yuchai are expected to rapidly increase their market share At the same time, diesel engines have a complex structure, and as demand continues to grow, core components will become key to capacity assurance and cost reduction. It is recommended to pay attention to key component companies that are experiencing tight supply and are accelerating their entry into the supply chains of leading customers.

Related Targets

1. Generator Sets: Weichai Power, KOTAI Power, Taihao Technology, Sumida; 2) Complete Engines: Weichai Power, Yuchai International, Chongqing Machinery and Electric, QCEC, Power New Science; 3) Core Components: Changyuan Donggu, POWER HF, Allied Machinery, Tianrun Industrial, Fuda Co., Ltd., Weifu High-Technology, Meihu Co., Ltd., Feilong Co., Ltd., Bohai Automobile, etc.

Risk Warning: AIDC capital expenditures may fall short of expectations; domestic substitution progress may lag behind expectations; industry competition may intensify; trade tariff frictions, etc