Huayuan Securities released a research report saying that with the exponential growth of energy demand for artificial intelligence, the existing energy system is facing challenges, and nuclear fusion is becoming a solution to the global energy dilemma. At present, as the game between China and the United States heats up, nuclear fusion is expected to become the next competition point after artificial intelligence. According to the Fusion Industry Association (FIA), as of April 2024, the total investment in the global controlled fusion industry has reached US$7.1 billion, an increase of US$900 million from the same period in 2023, and the total amount of financing has increased significantly for the third consecutive year. The commercial process of nuclear fusion is accelerating, and the Sino-US arms race may accelerate domestic capital expenditure, and the industrial chain is expected to benefit.

The main views of Huayuan Securities are as follows:

Event: On April 8, the English channel of Xinhua News Agency reported on the development of commercial nuclear fusion in China under the title "China edges closer to commercial nuclear fusion".

The Industrial Revolution has brought about the need for an energy revolution, and nuclear fusion is the ultimate energy source for a more ideal future for mankind

As the energy demand for AI grows exponentially and the existing energy system is challenged, nuclear fusion is emerging as a solution to the global energy dilemma. Compared with the existing energy system, nuclear fusion has three advantages:

1) Abundant and environmentally friendly raw materials: The raw materials for nuclear fusion mainly come from seawater and lithium ore, which are almost inexhaustible resources on the earth. In contrast to fossil fuels, nuclear fusion does not produce greenhouse gas emissions, and its reaction product is mainly helium, which is a harmless, non-polluting gas that is environmentally friendly.

2) Energy is large and sustainable: Nuclear fusion is the process by which light atomic nuclei combine into heavy atomic nuclei under high temperature and high pressure conditions and release energy. According to Einstein's mass-energy equation, the mass lost in this process is converted into energy and released. Nuclear fusion reactions have an extremely high energy density and can provide a stable and sustainable energy supply.

3) High safety: nuclear fusion reaction requires continuous external energy input (such as heating and magnetic field confinement) to maintain, once the input is stopped, the reaction is stopped immediately and will not trigger a chain reaction, so the safety is much higher than that of nuclear fission.

Nuclear fusion is a must for the next generation of energy revolution, and the imminent commercialization will force the Sino-US competition to begin, and the capital expenditure of the industrial chain is expected to accelerate

There are three ways to achieve controlled fusion constraints, gravitational (gravitational) constraints, inertial constraints, and magnetic constraints. After years of exploration, tokamak (magnetic confinement nuclear fusion) has become the main way of controlled nuclear fusion, and the International Thermonuclear Experimental Reactor (ITER) jointly built by China, the United States, the European Community, Russia, Japan, South Korea and India has made the scientific feasibility of magnetic confinement fusion experimentally confirmed on tokamak-type devices, and the development and research of fusion energy has entered a new stage.

At present, as the game between China and the United States heats up, nuclear fusion is expected to become the next competition point after artificial intelligence. According to the Fusion Industry Association (FIA), as of April 2024, the total investment in the global controlled fusion industry has reached $7.1 billion, an increase of $900 million over the same period in 2023

1) Hefei EAST plant 100 million degrees Celsius over 1,000 seconds of stable operation: In January, the EAST device successfully achieved more than 100 million degrees Celsius long-pulse high-confinement mode plasma operation, once again creating a new world record for high-confinement mode operation of tokamak device.

2) In March, the first roof of Hefei BEST project was successfully poured: marking that the BEST project has fully entered the stage of partition completion and partition delivery. As a follow-up project to EAST, the BEST project will demonstrate fusion energy power generation for the first time on the basis of the first-generation EAST device, and is expected to be the first to build the world's first compact fusion energy experimental device.

　　3) HL-3 achieves "double 100 million degrees" for the first time: In March, the new artificial solar "China Gyre-3" in Chengdu, Sichuan Province, achieved the first time that the temperature of both nuclear and electrons exceeded 100 million degrees Celsius.

4) Helion Energy: Closed a new round of $425 million in funding in January, backed by high-profile investors, including OpenAI CEO Sam Altman, with the goal of building and operating the world's first fusion power plant capable of delivering electricity to the grid by 2028.

Huayuan Securities believes that nuclear fusion, as the breaking point of the next generation of energy revolution, is a place where great powers must fight, and capital expenditure is expected to accelerate as commercialization approaches.

The core cost of nuclear fusion is mainly magnets, reactor internals and vacuum chambers, and the industrial chain is expected to benefit

The five main structures of the tokamak include vacuum chamber, magnet system, cladding module, deflector, and vacuum dewar. In the case of ITER, for example, magnets account for 28 percent, reactor internals and vacuum chambers together account for 25 percent, buildings account for 14 percent, and power, instrumentation and control, and other support systems account for 33 percent.

Subject matter

It is recommended to pay attention to Guoguang Electric (688776.SH) (ITER supporting equipment, special pumps and valves in the field of nuclear industry), Heforging Intelligence (603011.SH) (winning the bid for the core key components of the fusion new energy BEST project - manufacturing tasks such as vacuum chamber sector, window extension section and gravity support), Antai Technology (000969.SZ) (tungsten copper composite deflector), China Nuclear Construction (601611.SH) (a leader in the field of nuclear power engineering construction in China), and magnet-related Western Superconductor (688122.SH), Lianchuang Optoelectronics (600363.SH).

Risk Warning

The progress of nuclear fusion technology is lower than expected, the progress of related projects is less than expected, and the safety and environmental protection risks in the nuclear power field.