Market Insights
The data center liquid cooling market size was US$1.3 billion in 2024 and is likely to grow at an impressive CAGR of 22.8% in the long run to reach US$7.4 billion in 2031.
Liquid cooling technology is employed in data centers to efficiently manage and dissipate the heat produced by servers, networking devices, and other hardware. While traditional air cooling effectively transfers heat away from the CPU, it raises the overall system temperature as the heat is dispersed within the enclosure. In contrast, liquid cooling excels at transferring heat outside the system, utilizing radiator fans for effective dissipation. As data centers have expanded in size and density, the increasing heat output has posed a significant challenge for traditional cooling methods, making liquid cooling a more efficient alternative.
Liquid cooling servers rely on five key components: coolant solution (specialized liquids with additives for thermal efficiency), pump (circulates coolant with a strong flow rate), radiator (dissipates heat using single, dual, or triple-fan setups), water block (transfers heat to the coolant), and tubes with fittings (transport coolant through the loop). This method efficiently absorbs and removes heat from electronic components using water or specialized coolants. Over the past decade, the data center liquid cooling market has grown significantly, with notable players such as CoolIT Systems, Vertiv Group Corp., Green Revolution Cooling, Inc., and Boyd Corporation.
Technological advancements have made liquid cooling more maintainable, scalable, and cost-effective, reducing liquid usage by over 15% in hot, humid climates and up to 80% in cooler regions. Additionally, energy used for cooling can be recycled to heat buildings or water, significantly lowering the carbon footprint of air conditioning through advanced engineering coolants.
Market Dynamics
Market Drivers
The growing demand for data center liquid cooling systems is driven by three key factors: rising data center density, increasing thermal efficiency requirements, and rapid advancements in cooling technologies. Average server rack density in data centers has nearly doubled, from around 5 kW in 2017 to 8-10 kW in 2022, with significant growth in recent years. Projections indicate this trend will continue, with rack densities expected to reach 15-20 kW per rack by 2025. These developments have intensified the need for more effective cooling solutions, leading to the industry's accelerated adoption of liquid cooling.
Market Challenges
Several critical factors are anticipated to hinder the growth of the data center liquid cooling market. Chief among these challenges are high initial investment costs, intricate maintenance requirements, and limited compatibility with existing data center liquid cooling infrastructure. For small to medium-sized data centers, the substantial upfront costs associated with installing liquid cooling systems present a significant barrier to adoption. Additionally, integrating liquid cooling solutions into legacy data centers poses compatibility issues due to the older hardware and infrastructure still prevalent in many facilities.
Segments' Analysis
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Segmentations
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List of Sub-Segments
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Segments with High Growth Opportunity
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Product-Type Analysis
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Direct-to-chip, Immersion, and Other Products.
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Direct-to-chip holds the largest market share and is projected to experience the fastest growth in the coming years.
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Industry-Type Analysis
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Healthcare, Retail, Media & Entertainment, IT & Telecom, BFSI, and Other End-Use Industries.
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IT & Telecom is expected to be the leading category of the market, whereas BFSI is expected to grow at the fastest pace.
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Region Analysis
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North America, Europe, Asia-Pacific, and The Rest of the World
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North America is expected to remain the largest market for data center liquid cooling during the forecast period.
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By Product Type
“Direct-to-chip holds the largest market share and is projected to experience the fastest growth in the coming years.”
The market is segmented into direct to chip, immersion, and others. Direct-to-chip cooling is likely to dominate the data center liquid cooling market, accounting for nearly three-fourths of the market share. It efficiently targets heat sources, requiring less energy than traditional systems, and is easier to implement compared to immersion cooling. Other systems, primarily rear door heat exchangers, are expected to play a significant role in the future market. These systems draw warm air from the equipment, cool it, and expel the chilled air through the rear door. They can be installed directly alongside the rack.
By Industry Type
“IT & Telecom is expected to be the leading category in the market, whereas BFSI is expected to grow at the fastest pace.”
The market is segmented into IT & telecom, retail, healthcare, banking, financial services & insurance (BFSI), media & entertainment, and other end-use industries.
The IT & Telecom industry generates high computing demand from AI, machine learning, cloud services, and big data, resulting in significant heat generation that requires liquid cooling. As mobile networks and cloud computing grow, the number of data centers and their cooling needs has surged. The retail industry today depends heavily on e-commerce, digital transactions, and customer analytics, driving the need for high data processing power and, consequently, significant heat generation. Additionally, the industry prioritizes sustainability and cost reduction, goals that can be achieved by adopting liquid cooling systems.
Regional Analysis
“North America is expected to remain the largest market, and Asia-Pacific is likely to be the fastest-growing data center liquid cooling market during the forecast period.”
North America is expected to remain the largest market due to its early adoption of new technologies and the rise in connected devices. Increased investment in direct-to-chip and liquid immersion cooling, combined with the growth of 5G networks and edge data centers, further drives market expansion. U.S. operators, such as EdgePresence and EdgeMicro, are investing in these centers, while Canada is expanding its data center infrastructure in response to rising demand and sustainability initiatives.
Asia-Pacific has experienced steady growth and a rapidly increasing demand for cloud applications driven by social media, gaming, and entertainment. China's large market plays a significant role in this regional growth. Additionally, the rising adoption of AI, machine learning, and the Internet of Things (IoT) across various regional industries has created a need for advanced cooling systems to manage the heat generated by high-performance computing workloads.
Competitive Landscape
The market plays around data center liquid cooling is moderately concentrated, as more than 50 active companies are present in the market, which are operational in different regions. Most of the major competitors operate in various segments, providing special or comprehensive cooling products.
Here is the list of the Top Players (Based on Dominance)
- Johnson Controls
- Vertiv Group Corp
- CoolIT Systems
- Trane Technologies
- Stulz GMBH
- Airedale By Modine
- Carrier
- Daikin Industries
- Schneider Electric
- Danfoss
Note: The above list does not necessarily include all the top players in the market.
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Recent Developments
Recent Market JVs and Acquisitions:
An increasing number of strategic alliances, including M&As, JVs, etc., have been performed over the past few years:
- In October 2024, Schneider Electric acquired a controlling interest in Motivair Corporation, a leader in liquid cooling and thermal management for high-performance computing. Motivair's unique cooling solutions enhance Schneider Electric's data center liquid cooling offerings, reinforcing its position across the entire data center liquid cooling infrastructure, from grid to chip and chip to chiller.
- In December 2023, Vertiv acquired the data center liquid cooling company CoolTera, along with specific contracts, patents, trademarks, and intellectual property from a CoolTera affiliate. This acquisition enhances Vertiv's expertise in high-density cooling solutions.
Recent Product Development:
A growing number of product developments have been happening in the market in the last few years:
- In October 2024, Hewlett Packard Enterprise unveiled the industry's first 100% fanless direct liquid cooling system. This system is designed to enhance energy and cost efficiency for large-scale AI deployments, reducing power consumption by up to 90% compared to traditional air cooling.
- In October 2024, CoolIT Systems introduced a new range of AI cooling products, including the high-performance AHx240 and AHx180 liquid-to-air CDUs, designed to support the NVIDIA Blackwell AI platform. This announcement is accompanied by a substantial expansion of CoolIT Systems' manufacturing capacity.
Report Features
This report provides market intelligence most comprehensively. The report structure has been kept so that it offers maximum business value. It provides critical insights into market dynamics and will enable strategic decision-making for existing market players as well as those willing to enter the market. The following are the key features of the report:
- Market structure: Overview, industry life cycle analysis, supply chain analysis.
- Market environment analysis: Growth drivers and constraints, Porter’s five forces analysis, SWOT analysis.
- Market trend and forecast analysis.
- Market segment trend and forecast.
- Competitive landscape and dynamics: Market share, Service portfolio, New Product Launches, etc.
- COVID-19 impact and its recovery curve.
- Attractive market segments and associated growth opportunities.
- Emerging trends.
- Strategic growth opportunities for the existing and new players.
- Key success factors.
The data center liquid cooling market is segmented into the following categories.
Data Center Liquid Cooling Market, by Product Type
- Direct to Chip (Regional Analysis: North America, Europe, Asia-Pacific, and the Rest of the World)
- Immersion (Regional Analysis: North America, Europe, Asia-Pacific, and the Rest of the World)
- Other Product Types (Regional Analysis: North America, Europe, Asia-Pacific, and the Rest of the World)
Data Center Liquid Cooling Market, by Industry Type
- Health Care (Regional Analysis: North America, Europe, Asia-Pacific, and the Rest of the World)
- Retail (Regional Analysis: North America, Europe, Asia-Pacific, and the Rest of the World)
- Media & Entertainment (Regional Analysis: North America, Europe, Asia-Pacific, and the Rest of the World)
- IT & Telecom (Regional Analysis: North America, Europe, Asia-Pacific, and the Rest of the World)
- BFSI (Regional Analysis: North America, Europe, Asia-Pacific, and the Rest of the World)
- Others End-use Industries (Regional Analysis: North America, Europe, Asia-Pacific, and the Rest of the World)
Data Center Liquid Cooling Market, by region
- North America (Country Analysis: The USA, Canada, and Mexico)
- Europe (Country Analysis: Germany, UK, France, and Rest of Europe)
- Asia-Pacific (Country Analysis: China, Australia, Japan, India, and Rest of Asia-Pacific)
- Rest of the World (Country Analysis: Brazil and Others)
Research Methodology
- This strategic assessment report from Stratview Research provides a comprehensive analysis that reflects today’s data center liquid cooling market realities and future market possibilities for the forecast period.
- The report segments and analyzes the market in the most detailed manner to provide a panoramic view of the market.
- The comprehensive data and insights presented in the report are invaluable for market participants and investors. They enable them to identify readily accessible opportunities ("low-hanging fruit") in the market and develop effective growth strategies that accelerate their progress.
- This report offers high-quality insights and is the outcome of a detailed research methodology comprising extensive secondary research, rigorous primary interviews with industry stakeholders, and validation and triangulation with Stratview Research’s internal database and statistical tools.
- More than 1,000 authenticated secondary sources, such as company annual reports, fact books, press releases, journals, investor presentations, white papers, patents, and articles, have been leveraged to gather the data.
- We conducted more than 15 detailed primary interviews with market players across the value chain in all four regions and industry experts to obtain both qualitative and quantitative insights.
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Company Profiling
- Detailed profiling of additional market players (up to three players)
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Competitive Benchmarking
- Benchmarking of key players on the following parameters: Service portfolio, geographical reach, regional presence, and strategic alliances
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