Northeast Securities: SST Solid-State Transformers Expected to Become the Ultimate Power Supply Solution for Next-Generation Data Centers with Vast Future Market Potential

Stock News
10/16

Northeast Securities has released a research report highlighting the accelerated advancement of power supply technology. Solid-state transformers (SST), as a highly integrated new electric power device, achieve an energy efficiency of over 98.5% and can reduce volume by up to 90%. They are becoming core infrastructure to meet the power supply challenges of ultra-high-density server cabinets. SST solid-state transformers are expected to be the ultimate power supply solution for the next-generation data centers, with applications mainly including data centers and smart grids. Estimates suggest that the future market for SST could reach between RMB 50 billion and 100 billion, with high-frequency transformers accounting for RMB 7.5 billion to 15 billion. The Asia-Pacific market, led by China, represents a significant growth segment.

Key Insights from Northeast Securities: Global intelligent computing investments continue to rise, driven by increased chip power consumption and higher cabinet densities. From 2024 to 2025, global tech companies and governments are actively scaling up investments in AI computing power. In North America, capital expenditures by cloud service providers have notably increased; by mid-2025, NVIDIA's capital spending reached $3.122 billion, up by 132% year-on-year; Amazon's capital expenditure reached $57.202 billion, up by 76%; Microsoft spent $30.727 billion, an increase of 56%; Google reported $39.643 billion in capital expenditures, up by 57%; and Meta's expenditure reached $29.541 billion, up by 101%. In China, Alibaba's capital expenditure amounted to RMB 39 billion, a year-on-year increase of 32%. Alibaba plans to maintain an investment of RMB 380 billion over three years in AI. This demand surge driven by AI investments has directly contributed to significant increases in chip power consumption and cabinet power density. NVIDIA's B300 reaches 1400W, and the next-generation "Rubin" dual-chip GPU has a thermal design power of up to 2.3kW. The overall cabinet power density has significantly increased, imposing extreme requirements on power supply systems.

Consequently, the industry is rapidly advancing power supply technology upgrades, with SSTs as highly integrated new electric power devices. Their critical advantages include: firstly, ultra-high efficiency, with SST system efficiencies reaching up to 98.5%. For instance, a 100MW data center could save over 12 million kWh of electricity annually compared to Panama power (97.5%), translating to cost savings of approximately RMB 8.568 million; secondly, high integration, resulting in over 50% less footprint compared to traditional solutions, greatly optimizing space and reducing land costs; thirdly, a shift from silicon to copper alternatives, with SST systems reducing copper usage to near-zero, and copper consumption for power transmission decreasing by two-thirds; fourthly, convenient deployment, with a modular prefabrication approach that can shorten construction time to less than 10 days; fifthly, broad compatibility, with SST systems being compatible with existing transmission networks and renewable energy sources.

The SST industry chain consists of upstream material and component manufacturers, midstream system integrators, and downstream product application service providers. The upstream is mainly composed of suppliers providing core components and raw materials for power electronic devices, high-frequency transformers, structural and heat dissipation systems, and control systems. Their cost shares are 40%, 15%, 15%, and 15%, respectively. The midstream produces complete SST products, primarily dominated by overseas leaders such as Vertiv, Eaton, Delta, and Siemens. The downstream applications of SST focus mainly on data centers and smart grids, with NVIDIA confirming its future industrial layout for SSTs. With technological innovations in the midstream and clear application planning downstream, the SST market holds vast potential.

Vertiv is collaborating with NVIDIA to develop an 800V HVDC solution, while Eaton is partnering with Century Networks to develop a medium voltage energy router (MVSST), representing a significant evolution in data center energy architecture. Major internet companies, such as Meta, Microsoft, and Google, have also started to develop corresponding 800V DC technology solutions in collaboration with suppliers for their self-built data centers. Domestically, projects like the “東數西算” data center by Xidian Electronics are also boosting the application of SSTs.

Risk warnings include fluctuations in raw material prices, macroeconomic and industry demand volatility, intensifying market competition, and possible capital expenditures by internet firms falling short of expectations.

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