Data Center Liquid Cooling Market Trends

Growth Drivers

• Increasing AI and High-Performance Computing (HPC) Demands: AI and machine learning applications, as well as high-performance computing (HPC), require high processing power and generate a lot of heat. Air cooling, which has been traditionally used in computer rooms, does not work effectively at such a high density of computations, which is why liquid cooling is necessary for stable work. In October 2024, Fujitsu collaborated with Supermicro to deliver liquid-cooled systems specifically for Gen AI, HPC, and new-generation green data centers. As the application of AI increases across various sectors, liquid cooling technologies will be vital in augmenting the efficiency and durability of hardware, minimizing thermal issues in high-density computing systems.
• Energy Efficiency and Sustainability Goals: Data centers consume about 1% of electricity globally, and cooling systems consume up to 40% of the total electricity used in data centers. This has led hyperscalers and enterprises to look at liquid cooling as a better option than traditional methods. For example, in August 2024, Microsoft launched a new waterless cooling technology for its AI workloads, bolstering its net-zero efforts. In general, liquid cooling also cuts down power usage while at the same time increasing the efficiency of the data center. As more organizations set targets to reduce their absolute carbon emissions, the demand for liquid cooling facilities is anticipated to rise steeply.
• Government Regulations and Incentives: Currently, governments of various countries are providing subsidies, tax credits, and policy measures for energy-efficient cooling systems in data centers. Furthermore, a number of countries in Europe and North America have provided efficiency targets that promote the use of liquid cooling technologies. In September 2024, LiquidStack raised USD 20 million from Tiger Global to develop its research and development, and manufacturing for immersion cooling and direct-to-chip products. These investments demonstrate an increased focus on new generation cooling systems to meet environmental standards and foster data center liquid cooling market development.

Challenges

• Infrastructure Costs and Retrofitting Challenges: The cost of transitioning from air cooling to liquid cooling is high, especially for those data centers that have already been established. Installing liquid cooling systems in older facilities is expensive due to additional costs such as installation, redesigning of cooling loops, and the general layout of the facility. Some organizations have not adopted liquid cooling due to the high cost during installation, even though its benefits of energy conservation in the long run are well-known.
• Limited Standardization and Compatibility Issues: The absence of standardization of liquid cooling also leads to compatibility issues between different cooling solutions, server designs, and fluids. The costs of integrating liquid cooling are high due to the specificity of vendors and IT infrastructure, which makes the selection process lengthy. One of the main issues that arise when it comes to increasing the scale of liquid cooling is the compatibility between the cooling components and server systems.