At a glance. Water cooling jumped to 17% of Q1 sales from 8% in Q4 2024, and management then targeted 40–50% for full-year 2025 — a figure the November call later restated at 35%. Gross margin 27.4%, EPS NT$5.66. Liquid-cooling products were said to be on NVIDIA and AMD recommended-vendor lists. The call never said 800 V.
What changed this quarter
Water cooling became visible in the mix. 2% of sales in 2023, 12% in 2024, 17% in Q1 2025. Direct-to-chip liquid — cold plate through rack manifold, QD and CDU — is the product the company has been building since a 2012 IBM technology transfer, more than 12 years.
Thailand starts water-cooling volume. The plant, opened in 2020 for China-plus-one, was guided to begin water-cooling mass production in 2025 and to reach about 40% of group sales this year, a doubling.
Phones were dropped. From 2025 the "other" bucket is automotive, guided down from 5% of 2024 sales to about 2%.
The numbers
An absolute Q1 revenue figure was not given on the call.
| Q1 2025 | Value | Change |
|---|---|---|
| Revenue | not stated in NT$ | +7% QoQ, +40% YoY |
| Gross margin | 27.4% | lifted by the water mix |
| Operating expenses | about NT$640m (~US$20m) | new water lines and R&D |
| FX gain | about NT$66–70m | — |
| EPS | NT$5.66 (~US$0.18) | — |
2024 EPS was NT$21.23, with a cash dividend of NT$10 already approved. Quarterly opex is expected to settle around NT$650m, with the opex ratio falling toward 12–13% as sales grow.
NVIDIA 800V read-through
No 800 V. This is the earlier of the two AVC notes, and it is the one that names the vendor lists.
- Several liquid-cooling products are on NVIDIA and AMD recommended-vendor lists.
- Direct-to-chip is called the mainstream versus immersion. Liquid-to-liquid solves higher wattage than liquid-to-air. Immersion is in R&D; two-phase fluorinated fluids have PFC/PFAS issues in Europe and the US. Non-Western customers have asked about immersion.
- Blackwell (GB200, B200) is cited as the platform that pulls more of the rack onto liquid. Air-cooled heatsinks for that generation were described as growing from 1U/2U to 6U–8U, which is the physical case for leaving air.
- PUE of 1.1–1.2 versus 1.5–1.6 on air, and 30–40% less power, are the efficiency numbers used on stage — company framing, not a measured fleet figure.
The November 2025 note is the one with share, capacity and the fanless-tray ASP argument. Read this May note for RVL status and the first water-mix target.
Segments that moved
| End market | Q1 2025 share | Notes |
|---|---|---|
| Servers | 40% | 2024 server mix was about 70% CSP, 30% enterprise (Super Micro, Dell, HP, Lenovo) |
| PC | 35% | gaming and commercial 75% of PC |
| VGA | 17% | — |
| Other | 4% | phones being exited |
Guidance
- Full-year 2025 water mix 40–50% of sales (later cut to 35% on the November call).
- Thailand about 40% of 2025 group sales, including the new water lines.
- Q2 mix better than Q1, which is supposed to offset some Taiwan-dollar and copper pressure. Natural FX hedge is about half of the book.
- Some existing customers already on water; other accounts guided to start in 2026.
Management Q&A
Q: If 2025 water mix is targeted at 40–50%, does Thailand's water mix also rise? How utilised are the China plants?
A: China also has water lines — previously about 30–40k sets a month, 50–60k with overtime. Thailand was expanded for Blackwell-generation water demand, with water the main product there. In absolute sales, Thailand can reach about 40% of the group this year, a doubling. China will not sit idle: copper and other materials are prepared there, then sent to Thailand for assembly, and China still serves local customers. New Thailand water capacity was described as about ten times China's added volume.
Q: What is AVC doing in immersion cooling?
A: Direct-to-chip liquid has been the programme since 2012. Immersion was researched when the market looked at it. An immersion CDU is conceptually close to a direct-to-chip CDU, which AVC can supply. Single-phase (oil) and two-phase (fluorinated fluid) both exist; two-phase fluorinated fluids face PFC/PFAS restrictions in Europe and the US. If a customer wants it, AVC can develop in-liquid heat spreaders similar to air-cooled vapor chambers or heat pipes. Non-Western customers are already in discussion.
Q: What is the pipeline of server water-cooling programmes this year and next, and are there new China AI-server accounts?
A: Copper is prepared in China and assembled in Thailand. China capacity is small versus Thailand and mainly serves Chinese customers. Customers move onto water at different speeds: some existing accounts have started, others are expected in 2026. AVC said it will follow the customer.
Q: How does the stronger Taiwan dollar hit gross margin, and what does the second half look like?
A: About half the book is naturally hedged in dollars, but there is still an effect, especially in April and May. Q2 mix is expected to be better than Q1 as water penetration keeps rising, which should offset some of the FX and copper hit. Management does not expect a 2-point gross-margin drop of the kind past FX or copper swings produced.
Disclaimer
English notes on Asia Vital Components' investor conference of 23 May 2025, covering Q1 2025. The November 2025 note on this page restates the 2025 water-mix target at 35%. Figures are as presented by management and have not been independently verified. USD equivalents are approximate at about NT$31.5 to the dollar. For reference only; not investment advice.