Data Center Cooling Market Size, Share & Industry Analysis, By Product (Air Conditioners, Precision Air Conditioners, Liquid Cooling, Air Handling Unit, Chillers, and Others), By Data Center Type (Large Scale, Medium Scale, and Small Scale), By Cooling Technique (Room-based Cooling, Rack-based Cooling, and Row-based Cooling), By Industry (BFSI, IT and Telecom, Manufacturing, Retail, Healthcare, Energy and Utilities, and Others) and Regional Forecast, 2024-2032

The global data center cooling market size was valued at USD 15.16 billion in 2023. The market is projected to grow from USD 16.84 billion in 2024 to USD 42.48 billion by 2032, exhibiting a CAGR of 12.3% during the forecast period. The U.S. Data Center Cooling Market is anticipated to grow significantly, reaching an estimated value of 9.24 billion by 2032, driven by Rising Requirement for Data Centers to Propels the Demand.

Data center cooling refers to the various methods and technologies used to maintain optimal temperature and humidity levels in data centers. This is crucial to prevent overheating of servers, storage devices, and other networking equipment, ensuring they operate efficiently and reliably. Cooling systems can include air conditioning units, liquid cooling solutions, raised floor designs, and advanced techniques, such as free cooling, which leverages external cold air. Adequate cooling is essential for minimizing downtime, extending equipment lifespan, and reducing energy consumption. The market includes a wide range of products, including, air conditioners, precision air conditioners, liquid cooling, air handling unit, chillers, and others.

The COVID-19 pandemic surged remote work and increased reliance on digital services, impacting the market. This factor heightened the demand for data center facilities, driving investments in cooling infrastructure. However, supply chain disruptions and delays in construction projects due to lockdowns posed challenges, impacting the market's growth trajectory in the short term.

IMPACT OF GENERATIVE AI

Incorporation of Artificial Intelligence (AI) in Data Center Cooling Systems to Minimize Energy Consumption

The integration of Artificial Intelligence (AI) in data center cooling industry has significantly transformed the efficiency and effectiveness of temperature regulation within these facilities. AI algorithms analyze vast amounts of data generated by sensors embedded throughout the data center. This can dynamically adjust cooling systems in real-time by continuously monitoring variables, such as temperature, humidity, and airflow patterns to optimize performance while minimizing energy consumption. For instance,

• According to industry experts, by 2025, 75% of large enterprises will use AI-powered infrastructure management tools to improve data center performance and efficiency. This optimization can lead to significant energy savings and reduced operational costs.


• Furthermore, research by the Lawrence Berkeley National Laboratory suggests that AI-based cooling optimization can reduce data center energy consumption by up to 40%, highlighting the substantial impact of AI on energy efficiency in data centers.

Furthermore, these AI-enabled systems contribute to sustainability efforts by improving energy efficiency. AI algorithms can identify opportunities to reduce energy consumption, such as adjusting fan speeds or optimizing airflow pathways by continuously analyzing and optimizing cooling operations. This lowers operational costs for data center operators and reduces the environmental footprint associated with energy-intensive cooling processes. For instance,

• According to a study by Schneider Electric, AI-powered cooling optimization can lead to a 15-20% reduction in data center cooling costs. This cost-saving potential is driving the adoption of AI in the market.

Thus, the integration of AI in these systems represents a paradigm shift toward more innovative, efficient, and environmentally sustainable infrastructure management.

Data Center Cooling Market Trends

Growing Demand for Free Air Cooling Techniques to Fuel Market Growth

The recent trend in the market is the usage of air from outside as a solution for the air cooling system in the server rooms. However, the air present outside can be directly used in the server rooms. Free air cooling can be implemented by using separate air flow switching temperatures in the heat exchanger. For free air cooling solutions, the surrounding air must be of specific standards, and this technique can be applied in certain locations only.

Some vendors ensure that free air cooling can be used continuously when the outside temperature is under 20 ℃. For half of the operation time, this free air cooling solution can be used. The free air cooling is an inexpensive substitute for the conventional data center cooling. However, free air cooling cannot wholly replace conventional cooling systems; it is one of the most successful cooling substitutes for achieving savings in cost and environmental load, thus avoiding the need to use cooling towers and chillers to condition the data center.

The solution of the air cooling system has become much more robust with the acceptance of the American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE). It has accepted specific operation temperature and humidity ranges for utilizing the accessible air cooling technology. The free air cooling technique is an economical method for data center cooling, and many operators include this system. The rising awareness and interest in the environmental impact of heat dissipation through servers in data centers, along with rising demand for cost efficiency, is boosting the free air cooling trends in data center operators.

Data Center Cooling Market Growth Factors

Rising Requirement for Data Centers to Propels the Demand for Data Center Cooling Techniques

On-premise data centers are turning out to be a costly affair for most enterprises globally, owing to the rising amount of data generated through AI, big data, analytics, Internet-of-things (IoT). Subsequently, the majority of enterprises have started migrating to cloud storage for their data through service providers, such as Microsoft Azure, Amazon Web Services, and Google.

Growth in the commercial data center industry is a result of apparent migration from on-premises data center colocation to the cloud. High reliability, easy scalability, and cost reduction are some of the factors that have forced large enterprises to migrate their operations to colocations, and cloud/web hosting data centers. Additionally, storing data on the cloud is proving to be an effective medium, even for small enterprises. Demand for data centers is expected to boost as a result of the rising adoption of cloud services backed by increasing implementation of the Internet of Things (IoT), Artificial Intelligence (AI), Big Data, and Machine Learning technologies.

• According to Brightlio, as of December 2023, there are around 10,978 data center locations worldwide.

The data center stacks servers and equipment in rows and racks. These servers and equipment dissipate a high amount of heat, which needs to be handled properly. If the heat generated increases above a specific limit, it will affect the speed and durability of the servers and components. Thus, with increasing demand for data centers, the demand for cooling centers will also rise. Globally, the increasing number of data centers will drive the data center cooling market share in the near future.

RESTRAINING FACTORS

Rising Power Consumption by Data Center Cooling Systems to Impede Market Growth

As the data centers store a high number of servers and components in rows and racks, the heat generated through them is very high. To maintain proper temperature and humidity conditions is essential to maintain the consistency of the other IT equipment and servers in the data center.

• In a case study conducted by Ernest Orlando Lawrence Berkeley National Laboratory in 10 random data centers, it is revealed that 30% of power consumption in distribution and the variation is witnessed, and 55% of the total energy is consumed in cooling IT equipment in a data center.

Cooling systems consumption has the maximum share of the total energy used. Thus, the increase in power density, power costs, and high demand to increase the cooling efficiency are the major concerns for the data center operators.

Heat is the key factor that can increase failure rates in computer technology and lower device dependability. Additionally, traditional data centers have not witnessed any key development in energy management than their new hyper-scale cloud equivalents.

• SNIA Green Storage Initiative estimates that about 6% of total worldwide energy consumption is spent on electronics. If there are no significant improvements in the field to lower energy consumption, it will grow at a high pace.


• According to Cushman Wakefield, in 2023, data centers consumed 7.4 Gigawatts of power, a 55% increase from the 4.9 Gigawatts in 2022.

Although these are crucial concerns of data centers, proper management by arranging the servers in accordance with the heat generated will balance the load on cooling equipment.

Data Center Cooling Market Segmentation Analysis

By Product Analysis

Air Handling Unit Segment Leads owing to Rising Need for Avoiding Overheating of Equipment

Based on product, the market is divided into air conditioners, precision air conditioners, liquid cooling, air handling unit, chillers, and others. The air handling unit segment holds the highest share of the market as they are essential for maintaining optimal airflow, temperature, and humidity levels in data centers. These units efficiently circulate and condition large volumes of air, ensuring consistent cooling across the facility, which is critical for preventing equipment overheating and ensuring reliable data center operations.

Liquid cooling is expected to grow at the highest CAGR in the market. It offers superior cooling efficiency, allowing higher-density server configurations and reducing energy consumption. As data centers handle increasingly intensive workloads, liquid cooling solutions provide the necessary thermal management to support advanced computing needs while also promoting environmental sustainability.

By Data Center Type Analysis

Small Scale Segment Captures the Highest Market Share due to Adoption in Wide Industries

Based on data center type, the market is divided into large scale, medium scale, and small scale. The small scale segment holds the highest share of the market as they are widely used by a broad range of businesses, including SMEs, which require efficient, scalable, and cost-effective cooling solutions. These smaller data centers are easier and quicker to deploy, driving demand for cooling technologies tailored to their specific needs.

Large scale data centers are expected to grow at the highest CAGR in the market due to the rising demand for cloud services, big data analytics, and IoT applications. These facilities require advanced cooling solutions to manage the heat generated by high-density servers, driving the adoption of innovative and efficient cooling technologies.

By Cooling Technique Analysis

Room-Based Cooling Segment Holds the Highest Market Share due to Escalating need for Reliable and Uniform Cooling

By cooling technique, the market is classified into rack-based cooling, row-based cooling, and room-based cooling. The room-based cooling segment holds the highest share of the market as it is the traditional and widely adopted method for maintaining optimal temperatures in data centers. These systems are easier to implement and manage, providing reliable and uniform cooling across the entire room, making them suitable for a broad range of data center sizes and configurations.

Rack-based cooling techniques are expected to grow at the highest CAGR in the market as they offer precise, efficient cooling directly at the source of heat generation within individual server racks. This method is ideal for high-density computing environments, such as those required by modern data centers, enabling better thermal management and energy efficiency compared to traditional room-based cooling.

By Industry Analysis

IT and Telecom Segment Holds the Highest Market Share due to Higher Requirements for Maintaining Optimal Temperature

By industry, the market is divided into IT and telecom, manufacturing, retail, healthcare, energy and utilities, BFSI, and others. The IT and telecom segment holds the highest share of the market due to their extensive use of data centers to support critical operations, such as network infrastructure, cloud services, and data storage. These industries require efficient cooling solutions to maintain the optimal operating conditions for their servers and networking equipment, driving demand for advanced cooling technologies tailored to their specific needs.

Retail is expected to grow at the highest CAGR in the market owing to the increasing adoption of e-commerce and omnichannel retail strategies, which require robust data center infrastructure to support online transactions, inventory management, and customer analytics. As retailers expand their digital footprint, there is a growing need for efficient cooling solutions to ensure the reliability and availability of their data centers, driving demand for cooling technologies within this sector.

REGIONAL INSIGHTS

The global market scope is classified across five regions: North America, Europe, Asia Pacific, the Middle East & Africa, and South America.

North America holds the highest share of the market due to the region's extensive presence of large-scale data centers, driven by the rapid adoption of cloud services, increasing data traffic, and technological advancements. Additionally, North America is home to many leading data center operators and technology companies, which contribute to the demand for advanced cooling solutions. Moreover, stringent regulatory requirements regarding energy efficiency and environmental sustainability further stimulate the adoption of innovative cooling technologies in the region.

Europe holds the second-highest share of the market as robust infrastructure and a mature IT market drive the establishment of numerous data centers to support various industries and services. Additionally, Europe's strong emphasis on energy efficiency and environmental sustainability incentivizes the adoption of advanced cooling technologies. Furthermore, the increasing demand for cloud services, digital transformation initiatives, and IoT applications further propels the data center cooling market growth in Europe.

Asia Pacific is expected to grow at the highest CAGR in the market due to several key factors. Firstly, the region's rapid economic growth and urbanization drive the demand for digital infrastructure and cloud services, leading to the construction of numerous data centers. Additionally, rising internet penetration, smartphone adoption, and e-commerce activities fuel data consumption, necessitating efficient cooling solutions. Moreover, government initiatives promoting data center development, coupled with increasing investments from tech giants, contribute to the significant growth potential of the market in Asia Pacific.

The Middle East & Africa and South America are expected to grow at an average growth rate on the back of increasing digitalization, rising internet penetration, and expanding cloud computing services. While these regions are witnessing growing demand for data center infrastructure to support their digital economies, challenges such as limited access to reliable power infrastructure and regulatory constraints may moderate the growth rate compared to regions with more developed IT ecosystems. However, ongoing investments in data center construction and infrastructure upgrades are expected to drive steady growth in these regional markets.

List of Key Companies in Data Center Cooling Market

Launch of New Products by Key Players to Strengthen Market Positioning

Major players in the market frequently launch new products to enhance their market positioning by leveraging the latest technological advancements, addressing diverse consumer needs, and staying ahead of competitors. They prioritize portfolio enhancement and strategic collaborations, acquisitions, and partnerships to strengthen their product offerings. Such strategic product launches help companies maintain and boost their market share in a rapidly evolving industry.

LIST OF KEY COMPANIES PROFILED:

• Daikin Industries, Ltd. (Japan)


• Johnson Controls (U.S.)


• Schneider Electric (France)


• Asetek Inc. (Denmark)


• Thermal Care (U.S.)


• Vertiv Group Corp. (U.S.)


• Mitsubishi Electric Corporation (Japan)


• Danfoss (Denmark)


• Airedale International Air Conditioning Ltd. (U.K.)


• STULZ Air Technology Systems, Inc. (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• May 2024: STULZ Modular, a provider of modular data center solutions and a subsidiary of STULZ GmbH, collaborated with Asperitas to explore the potential of liquid cooling technology. This partnership aimed to leverage immersion cooling for high-density data center environments, offering innovative solutions to meet the evolving demands of the industry. The collaboration focused on a modular data center concept integrating immersion cooling for both indoor and outdoor installations.


• April 2024: Schneider Electric reinforced its commitment to India by investing USD 438.4 million to establish the country as a manufacturing hub. The inauguration of a state-of-the-art facility in Bengaluru, with an initial investment of USD 130.0 million, underscores the company's dedication to meeting the escalating demand for data center cooling solutions. This manufacturing hub would focus on developing innovative cooling solutions customized for India's burgeoning data center ecosystem.


• April 2024: Mitsubishi Electric launched the MECH-iF range, featuring an air-cooled chiller equipped with a proprietary single-screw compressor, enhancing energy efficiency and reliability for a prolonged operational lifespan. With capacities ranging from 345kW to 921kW, this range offers flexibility with either R1234ze (G04) or R513A (G05) refrigerant and patented screw variable-speed compressors.


• March 2024: Daikin Applied unveiled the Navigator WW water-cooled screw chiller with low-global warming potential (GWP) R-513A refrigerant, providing customers with an eco-friendly cooling solution. Clients can enhance efficiency further by combining the chiller with the optional Templifier TW water heater for a cost-effective heat recovery solution.


• November 2023: Schneider Electric collaborated with Intel to introduce a liquid cooling solution compatible with the groundbreaking Intel Gaudi3 AI accelerator. This innovative solution supports both air-cooled and liquid-cooled servers, leveraging Vertiv pumped two-phase (P2P) cooling infrastructure to ensure optimal performance.

REPORT COVERAGE

The report provides a detailed analysis of the market and focuses on key aspects such as leading companies, product/service types, and leading applications of the product. Besides, the report offers insights into the market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that contributed to the growth of the market in recent years.

Report Scope & Segmentation

ATTRIBUTE	DETAILS
Study Period	2019-2032
Base Year	2023
Estimated Year	2024
Forecast Period	2024-2032
Historical Period	2019-2022
Growth Rate	CAGR of 12.3% from 2024 to 2032
Unit	Value (USD Billion)
Segmentation	By Product Air Conditioners Precision Air Conditioners Liquid Cooling Air Handling Unit Chillers Others (Air Economizers, Heat Rejection) By Data Center Type Large Scale Medium Scale Small Scale By Cooling Technique Room-based Cooling Rack-based Cooling Row-based Cooling By Industry BFSI IT and Telecom Manufacturing Retail Healthcare Energy and Utilities Others (Government and Defense, Education) By Region North America (By Product, Data Center Type, Cooling Technique, Industry, and Country) U.S. Canada Mexico South America (By Product, Data Center Type, Cooling Technique, Industry, and Country) Brazil Argentina Rest of South America Europe (By Product, Data Center Type, Cooling Technique, Industry, and Country) U.K. France Germany Nordics Rest of Europe Middle East & Africa (By Product, Data Center Type, Cooling Technique, Industry, and Country) GCC South Africa Rest of the Middle East & Africa Asia Pacific (By Product, Data Center Type, Cooling Technique, Industry, and Country) China Japan India Southeast Asia Rest of Asia Pacific