Data Center Liquid Cooling Market to See 28.7% CAGR
The market for data center liquid cooling is projected to grow at a compound annual growth rate of 28.7%, driven by the adoption of high-thermal-load AI accelerators and sustainability goals. The trend reflects a structural shift in data center design to manage the escalating heat generated by powerful GPUs and other AI-focused hardware.
- There are two primary categories of liquid cooling: direct-to-chip, where liquid is piped directly to a cold plate on a processor, and immersion cooling, where entire servers are submerged in a non-conductive dielectric fluid. - Key players in the liquid cooling market include Vertiv, Schneider Electric, and CoolIT Systems, who provide a range of solutions from cooling distribution units (CDUs) to direct-to-chip components. In the specialized market for the cooling fluids themselves, companies like Shell, Dow Inc., and Exxon Mobil are major suppliers. - Liquid cooling can reduce a data center's cooling-related energy consumption by up to 90% compared to traditional air-based systems. A partial transition to 75% liquid cooling can result in a 27% reduction in facility power consumption. - While reducing energy use, some liquid cooling methods can increase water consumption, a metric tracked as Water Usage Effectiveness (WUE). However, closed-loop systems and new direct-to-chip solutions are being developed that do not increase a data center's water usage. - The market is seeing a rise in modular and containerized liquid cooling units, which allow for rapid, scalable deployment. For instance, a new partnership between Innovo, Castrol ON, and LiquidStack is developing a modular, AI-ready, direct-to-chip cooled data center in the UAE, expected to be complete by April 2026. - Major cloud providers are retrofitting existing facilities and designing new ones with liquid cooling. Amazon Web Services (AWS) is now rolling out custom direct-to-chip liquid cooling systems at scale after successful testing. - The push for liquid cooling extends to the edge, with companies like Valeo and 2CRSi developing autonomous, immersion-cooled edge data centers for Indian telecom operators that require zero water and can operate in ambient temperatures over 50°C. - North America accounted for over 35% of the data center liquid cooling market in 2025, but the Asia-Pacific region is projected to be the fastest-growing market, driven by government efficiency mandates and large-scale hyperscale construction in countries like China.
