Why was the AWS project delayed, and how large is the impact?

  • JPMorgan said low yields in downstream execution, together with mismatches among some components, delayed shipments of AWS liquid-cooled Trainium 3 servers from the originally planned September 2026 to 11–December. Orders for system-level components such as cold-plate modules, manifolds, chassis and rails were consequently delayed by about two months.
  • Using thermal-component suppliers’ figures, the bank expects fourth-quarter shipments of T3 liquid-cooling orders to be equivalent to approximately 1,000 racks, below its previous estimate of 2,000–3,000 racks; based on ODM rack assembly, liquid cooling accounts for approximately 5%.
  • The bank currently sees no requirement for the supply chain to redesign products and believes the delay mainly reflects a short-term transition from air cooling to liquid cooling.

When could T3 liquid-cooling orders ramp up?

  • JPMorgan expects T3 liquid-cooled server volumes to increase markedly in the first half of 2027 as production becomes smoother, particularly in 3–April; liquid-cooling penetration is expected to reach approximately 50% by mid-2027, and its share for the full year could exceed 50%.
  • This means the bank’s assessment of thermal-management suppliers depends on orders moving from a low fourth-quarter base into subsequent mass production, while near-term shipments will continue to fluctuate.

How are the Google and Nvidia projects progressing?

  • Small-volume shipments of liquid-cooling orders for Google TPU v8t began in October 2026. PCB manufacturers expect mass production in November, while JPMorgan expects liquid-cooling orders to ramp up markedly at the end of the fourth quarter or in the first quarter of 2027; however, the PCB mass-production timetable is still later than some optimistic expectations.
  • For Nvidia VR200, cold-plate suppliers began shipments in late September, mainly for Mellanox switch trays; orders for compute trays began shipping in the fourth quarter.
  • Because of unsatisfactory downstream yields, the bank expects fourth-quarter VR200 cold-plate shipments equivalent to 5,000–10,000 racks and ODM assembly volumes of 5,000–7,000 racks, both below the previous expectation of more than 10,000 racks.

Which suppliers are linked to these projects?

  • JPMorgan said recent concerns about project delays have weighed on related suppliers. Asia Vital Components (AVC) and Fositek are the main suppliers of cold plates and quick connectors, respectively, for these projects.
  • The bank remains positive on the liquid-cooling sector going into 2027, citing its expectation of a more pronounced increase in liquid-cooling penetration in the first half; both companies have an overweight rating from the bank.