By Cheng Du | Edited by Yang Xuran
From indoor air conditioning to AI temperature control, this appears to be a logical development path. Leveraging their accumulated expertise, home appliance companies have extended their product reach into the AIDC (AI Data Center) liquid cooling sector.
With the explosion of high-intensity training demands, the power density of AI chips has risen sharply. The power consumption per rack has increased from the traditional 2-8kW to 20-50kW, and may exceed 100kW in the future. As these chips are deployed by the thousands in data centers, the increase in power density is dramatically amplified at the rack level.
This turns AIDCs into true "power-hungry beasts," elevating heat dissipation to become the second-largest energy consumption item after IT equipment.
In overseas markets, Johnson Controls, Trane Technologies, and Carrier Global have all entered the AIDC heat dissipation field. Domestically, the three home appliance giants—Midea, Gree, and Haier—have simultaneously set their sights on this booming and expansive track.
Affected by the downturn in the real estate cycle, the traditional home appliance industry has entered a phase of cutthroat competition for existing stock, with the overall market size continuously contracting. Furthermore, rising copper prices are eroding industry profits and even expanding losses. Apart from diversified transformation, the giants have few other options. In this regard, neither Gree's new energy ventures nor Midea's industrial robotics can match the historical opportunity presented by AI.
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Divergence
The climate of China's home appliance industry continues to cool as winter approaches.
According to AVC statistics, domestic home appliance retail sales totaled CNY 604.1 billion in the first three quarters of this year, a year-on-year decline of 10%. Corporate performance diverged significantly: among the 29 listed home appliance companies, only four achieved profitability with positive net profit growth, while the big three white goods manufacturers generally faced performance pressure.
If we further exclude Flyco Electric (the "king of shavers"), Hisense Visual Technology (a black goods enterprise), and Skyworth Digital (which relies primarily on smart terminals), Midea is the only white goods company on this list that truly achieved positive profit growth.
A detailed breakdown of Midea's business portfolio reveals that in the first three quarters, Building Technology and Robotics & Automation contributed revenues of CNY 30.9 billion and CNY 24.9 billion respectively, both growing by 10% year-on-year, far exceeding the overall growth rate of 1.2%.
In particular, Building Technology has become the largest business segment outside of the core smart home base. Its gross margin approached 30% in the first half of the year, making it the most profitable department within the group.
By 2026, after years of exploration, the three home appliance giants have moved from the same track onto markedly different paths, with corporate performance divergence becoming even more pronounced.
Fang Hongbo emphasized clearly at the 2026 semi-annual earnings briefing, "ToC business is the moat for current survival and development, while ToB business is the guarantee for weathering cycles."
Since taking the reins from He Xiangjian, Fang Hongbo has led Midea in transforming from a traditional home appliance manufacturer into a diversified global technology company. Although the acquisition of KUKA Robotics initially brought certain financial burdens, after enduring the toughest years, this deal is gradually being digested into valuable new assets.
Currently, relying on ToB businesses such as commercial and industrial solutions, which accounted for 26.8% of revenue in H1, Midea has withstood the risk of the declining white goods market and demonstrated strong growth resilience.
In comparison, Haier and Gree still rely more heavily on their home appliance businesses.
Haier employs a strategy resonating globalization, premiumization, and ecosystem building among the three giants. Its overseas share has reached 52%, the highest among the three companies. By acquiring international brands like Sanyo Home Appliances and GE Appliances, and establishing its own premium brand Casarte, Haier has built seven global high-end home appliance brands, forming long-term competitive barriers.
For Gree Electric, after completing management buyouts, HVAC remains the absolute core. Consumer electronics accounted for 83% of revenue in the first half, with overseas contributions at only 14%. Air conditioning contributes the vast majority of revenue. Gree has sought diversified transformation for many years, some openly and others strategically, but most attempts have failed to gain significant momentum.
For years, the secondary market has viewed Gree as a "high dividend, high barrier, low growth" cash cow stock, with little expectation for actual growth.
However, the current explosion in AI infrastructure has brought epic opportunities to HVAC companies represented by Gree. Temperature control has become the second-largest energy consumption item in data centers after IT equipment. With the expansion of computing power infrastructure, the investment value of this segment is beginning to be re-evaluated.
CICC predicts that the global intelligent computing center liquid cooling market size will be approximately CNY 114.7 billion this year, a year-on-year increase of 273%; Soochow Securities estimates that the global liquid cooling market size will approach CNY 150 billion next year. For comparison, the compound annual growth rate of the traditional air conditioning equipment industry is only 4%.
Temperature control systems are inherently the strength of HVAC companies. Now, the three home appliance giants have once again arrived at the same doorstep.
Pathways
Consistent with their respective transformation strategies, the three white goods giants have taken different paths to enter the AIDC temperature control field.
Relying on self-owned capacity, full-stack R&D, and ecosystem integration, Midea has quickly become a powerful player in the track. At this year's OCP Global Summit, Clivet, under Midea Building Technology, won the Outstanding Technical Sharing Award for its next-generation magnetic levitation centrifugal compressor and full-chain liquid cooling solution.
Consequently, Midea was synchronously added to NVIDIA's Vera Rubin platform ecosystem partner list, with its temperature control solutions included in NVIDIA's next-generation AI supercomputing reference architecture.
This means Midea's AIDC solutions have received NVIDIA's "endorsement." Once certified, the equipment can be slightly modified to serve as standard modules embedded in NVIDIA's next-generation AI bases. This standardization capability may be more valuable than leading specifications in individual devices.
Behind the qualifications lies the support of large-scale production capacity. The Shunde Liquid Cooling Intelligent Manufacturing Base, with a total investment exceeding CNY 1 billion, officially launched in March, anchoring magnetic levitation main units and core components for the full series of CDUs (Coolant Distribution Units). Midea Building Technology operates four domestic liquid cooling lines (in Shunde, Chongqing, Hefei, and Longyan), with a total annual capacity of 100,000 units for CDUs, magnetic levitation cold sources, energy storage air conditioners, fan walls, and other equipment.
Downstream customers have already placed numerous orders. Midea won a bid worth over CNY 200 million for China Unicom's centralized procurement of communication room air conditioners and secured 70% of the share in China Mobile's new round of centralized procurement for low-pressure chiller units. It also collaborated with Alibaba Cloud to develop liquid cooling temperature control solutions for AI clusters, and participated in China Telecom's Greater Bay Area liquid cooling intelligent computing project.
Gree chose to enter the liquid cooling track through capital alliances.
At the beginning of this year, Gree and GDS established a joint venture, "Ge'an Data Information Technology (Kunshan) Co., Ltd.," aiming to advance Gree's green computing equipment production base, focusing on liquid cooling systems, high-performance computing cooling facilities, etc.
GDS is a veteran domestic AIDC operator, with its intelligent computing scale breaking through 4000P, targeting an expansion to 10000P in 2026. By co-developing liquid cooling solutions with GDS, Gree can bypass lengthy customer certifications and directly channel downstream procurement needs into the joint venture.
Gree's position and technical advantages in the HVAC field are evident. Having deeply cultivated refrigeration and thermal management for many years, it has mastered key technologies such as cold plate liquid cooling systems and phase-change cooling systems. Its full-stack cooling solutions can achieve an energy-saving target of PUE ≤ 1.15. Previously, it successfully delivered several key projects, including China Unicom's Yangtze River Delta Intelligent Computing Center and Ulanqab Intelligent Computing Center.
Haier is going global. In May, it invested over CNY 1 billion in the Rayong Industrial Park in Thailand to deploy data center equipment such as magnetic levitation cold sources, CDUs, and intelligent fan walls. Simultaneously, it integrated Leishen Computing Power, Nahui New Energy, and Large HVAC, forming a "Computing-Power-Cooling" full-chain export posture.
In the third quarter, Haier's air-cooled magnetic levitation units achieved a breakthrough in North America, with data centers in Malaysia and Singapore adopting Haier's air cooling solutions.
As an emerging business segment, data centers are developing rapidly. Reports indicate that the department's Q3 sales were nearly five times that of the same period last year, representing a further surge after a 50% growth rate in the first half.
To this end, Haier Smart Home has set a goal of "150% annual growth and reaching CNY 10 billion in three years," highlighting the growth potential of this track.
Convergence
Despite differing development paths, the three white goods giants have all "heavily invested" in the same technological foundation—magnetic levitation.
In 1993, the Turbocor team in Melbourne, Australia, initiated the R&D of oil-free magnetic levitation centrifugal compressors, starting the commercialization journey of this technology. By 2004, Danfoss integrated and then fully acquired Turbocor, becoming the undisputed leader in this track.
To date, Danfoss dominates 70% of the global magnetic levitation compressor market, with cumulative shipments exceeding 160,000 units, and holds nearly half of the domestic compressor market share.
However, due to the explosion in AI demand, Danfoss faces tight capacity constraints. Moreover, it is merely a compressor supplier, not an OEM. Domestic home appliance giants are catching up rapidly by leveraging self-developed magnetic levitation compressors and full-stack technologies.
It is important to note that the compressor is the sole energy source driving the refrigeration system, and its operating efficiency determines the overall performance output of the system. Data shows that the cost of refrigeration compressors accounts for about half of the chiller unit's total cost.
Thus, the compressor represents the highest value and technical barrier in the primary side cold source. By using magnetic levitation as the technological foundation to build full-stack capabilities, home appliance giants can construct substantial moats.
Refrigeration systems can be divided into primary and secondary sides. The primary side is the large cold source loop, relying on magnetic levitation chillers and cooling towers to dissipate heat outdoors. The secondary side is the rack loop close to GPUs, isolated via CDU heat exchange.
Currently, domestic manufacturers are clustering around secondary side terminal components, such as Envicool, Shenling Environmental, and Goaland, focusing mainly on CDUs, connectors, and quick couplers.
In contrast, the three giants possess primary side cold source capabilities. Entering from the core of the cold source allows them to escape the red ocean of single-category competition and grasp the "vital point" of AIDC efficiency.
For instance, Haier led the compilation of China's first national standard for oil-free suspended centrifugal chillers. Its CDU supplementary cooling magnetic levitation products, co-developed with top internet companies, have been implemented. In a national-level supercomputing center, 27 Haier magnetic levitation units helped keep the overall PUE below 1.2.
Midea recently launched its next-generation dual-rotor asynchronous magnetic levitation technology, breaking away from traditional air conditioning design frameworks and specifically developed for data center working conditions.
In terms of supply chain, Gree partnered with DunAn Environment to integrate components and system integration. Its AIDC air-cooled magnetic levitation chiller units began mass production in October. Previously, it released the "Ice Cube" magnetic levitation integrated CDU.
Unlike installing air conditioners after homes or commercial centers are built, AIDC temperature control solutions involve an extremely precise and complex system, often requiring suppliers to participate from the initial design stage.
Furthermore, factors such as geographical environment, water resources, electricity prices, green power, and policies vary by region, necessitating different cooling solutions. Therefore, the competitive dimension for providers has shifted from "comparing single devices and parameters" to a comprehensive contest of "overall capability + system adaptation + engineering delivery."
The advantage in systematic delivery accumulated by HVAC companies is beginning to highlight its importance during this period.
Final Thoughts
Finding incremental growth within existing stock has been the most critical issue on the agenda for home appliance companies in recent years.
Prior to this, both smart homes and global markets provided certain increments for home appliance enterprises. However, for the three largest giants in the industry, these market spaces were still insufficient in scale and volume.
The explosion in AI computing infrastructure construction has presented these home appliance companies with a new era of opportunity. Based on their inherent technological advantages, massive manufacturing scale barriers, and the reuse of past comprehensive capabilities, the core competencies of the three home appliance giants and the development of the AI industry have experienced a historic convergence.
This strategic positioning is not simply business diversification; it is an inevitability determined jointly by the emergence of demand-side needs, the migration of supply-side capabilities, and the massive increments on the commercial side.