Summary of Key Points
After rising from a small county to a trillion-dollar city through its focus on "industrial chain investment" (such as in BOE and ChangXin Storage), Hefei has now bet on the seemingly intangible field of controlled nuclear fusion. This move is not a blind gamble but rather a strategic decision based on 40 years of technological accumulation at the Hefei Science Island (from the HT-6B to the EAST superconducting reactor). The city has adopted a model that combines "large-scale scientific facilities, industrial chain development, and long-term capital investment" to build a comprehensive ecosystem ranging from basic research (EAST) to component verification (CRAFT) to power generation demonstrations (BEST). More than 70 related companies have been established in this process. Although there are still technical challenges (such as achieving the required Q value and developing suitable materials) and risks related to profit distribution in the commercialization of nuclear fusion, Hefei's early investment aims to secure a foothold in the trillion-dollar market for the next generation of energy and establish itself as a core competitor in the future.
Why Does Hefei Dare to Invest in Nuclear Fusion?
Many believe Hefei is taking a big risk, but it actually has two solid foundations:
- A 40-year foundation in technology: The Plasma Physics Institute at Hefei Science Island was established in 1978. The institute has developed the HT-6B (one of China's first tokamaks) from scratch, modified the Soviet T-7 device into the HT-7 (China's first superconducting tokamak), and created the world's first fully superconducting, non-circular cross-section tokamak, EAST, accumulating unique technology and expertise.
- Continuing the success of industrial chain investment: Previous investments in companies like BOE have led to the development of entire display industries, and the investment in NIO has spurred the growth of the new energy sector. With nuclear fusion, Hefei is again using a large-scale scientific facility as a catalyst. Local companies have developed specialized materials and components for the reactor, fostering the growth of an entire industrial chain. For example, Hefei's company Kuafu Superconduct has made significant breakthroughs in superconducting materials for the EAST upgrade.
How Deep Is Hefei's Investment in Nuclear Fusion?
Hefei is not just building a single facility; it is establishing a complete system from research to commercialization:
- Three well-defined facilities:
- EAST (Eastern Superconducting Ring): Functions as a "physical laboratory" to understand plasma behavior, setting a world record in 2025 with 1066 seconds of operation at 100 million degrees Celsius.
- CRAFT (Kuafu Device): Tests core components of fusion reactors to ensure they can withstand extreme conditions, producing the world's largest superconducting magnet in 2026 (30% larger than that of ITER).
- BEST (Breakthrough Energy Science Test Reactor): A prototype for power generation that uses high-temperature superconducting magnets to reduce the size of the reactor (only 1/4 the size of ITER), with the goal of generating electricity by around 2030.
- Comprehensive industrial chain:
- Upstream materials: Kuafu Superconduct produces superconducting wires (using liquid nitrogen, which is much cheaper than liquid helium), and Maiwei New Materials develops tungsten-based alloys capable of withstanding temperatures of 3400 degrees Celsius.
- Midstream components: Zhongke Haiao manufactures power systems, and Xirong Zhaobo specializes in radio frequency heating.
- Downstream integration: Companies like Jufei New Energy focus on system integration, while Star Nuclear Fusion aims directly at commercial power generation.
- Long-term capital support: Hefei's Industrial Investment Corporation has invested 2.9 billion yuan in nuclear fusion and established a 15-year venture capital fund (while typical funds last 7-10 years), recognizing the long-term nature of this project. Private capital has also shown interest, with four companies raising over 1.5 billion yuan in June, including well-known investor Ge Weidong.
How Far Has Hefei Come?
Hefei's nuclear fusion efforts have advanced to the pre-commercialization stage:
- Technological breakthroughs: The 1066-second operation at 100 million degrees Celsius with EAST demonstrates stable plasma behavior. The complete domestication of superconducting materials for CRAFT means that core components are no longer a bottleneck. BEST's early completion will enable power generation tests by 2027.
- Industrial presence: There are over 70 nuclear fusion-related companies in Hefei, with annual revenues of nearly 400 million yuan in the Shushan district. Although this number is small compared to global standards, it is quite significant.
- International leadership: Hefei's goals (such as generating electricity by 2030) are nine years ahead of ITER, giving it a significant advantage in the global energy competition.
Challenges Ahead: Technical Barriers and Profit Distribution Risks
Nuclear fusion is not a guaranteed success, and Hefei faces several challenges:
- Technical risks:
- Q value: Current reactors have more input than output; BEST needs to achieve sustained Q values above 1 (similar to a flame that burns on its own).
- Material challenges: Neutron radiation in fusion reactors is much stronger than in nuclear power plants, and suitable materials that can withstand these conditions are still in development.
- Tritium supply: Tritium is scarce in nature, and commercial reactors need to produce it on-site; this technology has not yet been mastered.
- Route risks: If alternative approaches (such as fusion reactors or lasers) make breakthroughs, the initial investments in tokamaks could be wasted.
- Profit distribution: Hefei is currently involved in the supply of upstream materials and components, but the high-profit stages of reactor assembly and operation may be taken over by other cities with more favorable policies, limiting Hefei's profit margins.
Hefei's Ultimate Goal: Seizing Control of the Next Generation of Energy
Hefei's transformation from a small county to a trillion-dollar city has been driven by its ability to position itself at the forefront of technological trends. Its investments in BOE and ChangXin Storage have led to the development of the display and semiconductor industries, respectively. With nuclear fusion, the city aims to gain control of the future energy market. If nuclear fusion becomes successful, it will solve the energy crisis by providing an almost unlimited source of energy (deuterium from seawater). Whoever masters this technology will dominate this trillion-dollar market.
Even if nuclear fusion does not become commercially viable within 10 years, the related technologies (superconducting, advanced manufacturing, etc.) will lay the foundation for Hefei's industrial growth for the next 20 years. Just as BOE transformed Hefei, these developments will also create a talent pool for high-end manufacturing.
Hefei's approach is never about gambling; it is about strategically positioning itself at the forefront of innovation. Opportunities do not wait; if others occupy the leading positions first, Hefei will be too late to catch up. With 40 years of accumulation, Hefei is ready for the day when nuclear fusion becomes a global reality.
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Source: Cool Labs (ID: coollabs)
Edited by: Cool Labs Team
Note: Data and progress are based on public reports; official information should be consulted for accuracy.