Computing power demand surges, and Central China internal components usher in new opportunities

Dahe Cailefang reporter Zhang Keyao

“In the first quarter, our orders were full, and the workers all had plenty of drive.” Recently, multiple production lines of Yantai Neiji Pei Group Co., Ltd. (hereinafter referred to as “Yantai Neiji Pei”), headquartered in Mengzhou, Jiaozuo, Henan, including cylinder liners, pistons, and ultra-hard CNC cutting tools, have been running at full speed.

Cylinder liners and pistons are key components of internal combustion engines. At present, with the explosive growth in computing power demand, internal combustion engines used in generator sets are seeing rapid expansion. Dahe Cailefang reporter recently conducted on-site research at Yantai Neiji Pei’s Mengzhou headquarters and learned that the operating principles of internal combustion engines for use in vehicles and in power generation equipment are basically the same. Yantai Neiji Pei has already supplied internal combustion engines for generator sets to support computing centers.

Unsealing large-bore cylinder liners

Cylinder liners are Yantai Neiji Pei’s core products. Related revenue has an overwhelming advantage within the company, and its output and sales volumes are also among the leading figures in the industry. Dahe Cailefang reporter visited the exhibition hall at Yantai Neiji Pei’s Mengzhou headquarters, where various types of cylinder liners and their customers’ honors were on display everywhere.

A person in charge of Yantai Neiji Pei’s cylinder liner business explained that internal combustion engines have advantages such as good fuel adaptability, high thermal efficiency, and low cost, making them the main power source for large equipment such as commercial vehicles, construction machinery, ships, and generator sets. In addition to applications in the above-mentioned conventional fuel-power systems, Yantai Neiji Pei’s cylinder liner products are also used in hybrid electric vehicles and in new energy vehicle applications such as methanol and hydrogen.

Although cylinder liners are widely used, there are still differences in dimensions and specifications among cylinder liner products in different application scenarios. For example, cylinder liners for internal combustion engines used in generator sets and ships are larger than those used in vehicles, and are classified as large-bore cylinder liners. Notably, at the end of January, Yantai Neiji Pei completed the acquisition of 59% of the equity in Henan Zhongyuan Jikaiain Cylinder Liner Co., Ltd. (hereinafter referred to as “Zhongyuan Jikaiain”). The sales restrictions on its large-bore cylinder liner products under the original joint-venture contract were officially lifted.

The person in charge stated that, for the computing centers that everyone is currently discussing, they all need diesel generator sets as backup power sources. Large-bore cylinder liners are used in the internal combustion engines of generator sets supporting computing centers. Yantai Neiji Pei incorporates Zhongyuan Jikaiain into its consolidated financial statements. By integrating its production capacity, market share, and high-quality international customer resources, it consolidates Yantai Neiji Pei’s competitive position in the global large-bore cylinder liner market.

At this stage, domestic and overseas computing power demand is booming. The “Top Ten Trends in Global Computing Power (2026)” shows that in the coming five years, the scale of intelligent computing power is expected to grow by a thousand times, with the inference side accounting for more than 70%.

“There is an opportunity for the supporting equipment and their components around computing centers to benefit as well.” The person in charge told Dahe Cailefang reporter that, in addition, opportunities in the electricity and energy market in North America, as well as the growth of China’s push for high-quality development of the marine economy and the promotion of increases in the value added of the shipbuilding industry, will also benefit the large-bore cylinder liner market.

Steel piston market promotion continues

If internal combustion engines are the “heart” of large equipment such as cars and ships, then pistons and cylinder liners are the “chambers” and “muscle” of the “heart.” Internal combustion engines rely on pistons moving back and forth inside cylinder liners to generate power output. Zhongneikaixie Automotive New Power Systems Co., Ltd. (hereinafter referred to as “Zhongneikaixie”) is a wholly owned subsidiary of Yantai Neiji Pei. It works with Yantai Neiji Pei to carry out the piston business.

Before being interviewed by Dahe Cailefang reporter, the assistant to the general manager of Zhongneikaixie, Sha Aijun, had just finished a production scheduling meeting. He said that thanks to the introduction of the steel piston manufacturing technology and production lines of KS under Germany’s Rhein Metal Group, the company produces steel pistons using friction welding technology. The steel pistons have advantages such as high strength, high fatigue performance, and lightweight characteristics.

“Previously, we learned by following KS. Now we have already absorbed and internalized it, and we have our own intellectual property rights.” Sha Aijun said. Compared with traditional aluminum pistons, steel pistons can reduce fuel consumption and carbon emissions, meeting the application needs of multiple fuel scenarios such as diesel, natural gas, methanol, and others.

Using pistons and cylinder liners together means that the two can share customer channels. From the perspective of customer structure, this is also the case: First Automobile Works, Sinotruk, Weichai, Yuchai, and others are major customers of Yantai Neiji Pei’s cylinder liner and piston businesses. Sha Aijun introduced that the company’s piston products not only fill the blank in China’s domestic high-end steel piston market, but also enable synchronized design, synchronized R&D, and synchronized mass production with major customers. When piston products go overseas, they will be coordinated with cylinder liners.

In recent years, the domestic and international national VI standards have become increasingly stringent, bringing a boost to the popularization of the steel piston market. Sha Aijun revealed that the company’s steel pistons meet national VI and above emission standards, the recognition of products by OEMs is continuously increasing, and the orders for the piston business have shown good performance.

An unexpected surprise: ultra-hard materials business

In Yantai Neiji Pei’s business layout, two innovative lines—electronic control actuators and bimetal composite brake drums—are handled respectively by Henan Hengjiu Braking System Co., Ltd., which is established externally and held via acquisition and control, and by Zhongyuan Neiji Pei (Shanghai) Electronic Technology Co., Ltd., which is established for external operations. Both have distinct outward-expansion innovation characteristics. The ultra-hard materials business, on the other hand, is a typical outcome of in-house innovation.

As a controlling subsidiary of Yantai Neiji Pei, Dingrui Technology Co., Ltd. (hereinafter referred to as “Dingrui Technology”), founded in 2015, mainly operates ultra-hard materials business such as ultra-hard CNC cutting tools, CNC tool shanks, and honing abrasive strips. Tao Hongjun, deputy general manager of Dingrui Technology, recalled that the company was created inside Yantai Neiji Pei’s factory to serve the production of Yantai Neiji Pei.

Stepping into the production workshop for the ultra-hard materials business, what you first see are cutting tools, abrasive strips, and other main products of Dingrui Technology placed on a worktable by the wall on the right side. Further inside are the production lines. Tao Hongjun told Dahe Cailefang reporter that at first, when Yantai Neiji Pei produced cylinder liners, it needed to import abrasive strips. It cost more money and also caused issues where the external suppliers “held the company by the neck.” Later, they decided to purchase raw materials and do it themselves.

“By 2019, we made them, and the performance was even better than imported goods.” Tao Hongjun said. By 2020, while meeting the group’s production needs with its ultra-hard materials products, the company also began promoting them to external markets. After making money, it bought equipment. With rolling development, the company has now grown to around 200 people.

Currently, Dingrui Technology’s ultra-hard materials products include more than one thousand categories. The application scenarios are not only within the Yantai Neiji Pei system, but also include new energy fields such as wind power and solar power. Tao Hongjun disclosed that next, the company will continue to develop new materials and appropriately expand production capacity, so as to better meet market delivery needs.

Editors: Zhang Zhanqiang | Proofread by: Chen Xiajuan | Reviewed by: Xu Jiao

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