It’s been an eventful week for the high performance computing and data center industry as many chip makers, including Nvidia and AMD, and data center suppliers announced new products and architectures during the Computex show in Taiwan.
Among the flurry of announcements, we view Super Micro’s introduction of liquid-cooled AI racks and bullish expectations about liquid cooling as a standout. The leading maker of AI servers indeed expects to install direct liquid cooling in 15% of the racks it ships this year and 30% next year, with its technology getting the backing of Nvidia CEO Jensen Huang.
As a reminder, air cooling has long been the standard in data centers to dissipate heat and hyperscalers have largely avoided until now alternative solutions (such as liquid cooling) that appear more complex and require some data center architecture design evolutions. But with air cooling failing to maintain monster AI chips at normal working temperatures, data centers have no choice but to pivot towards liquid solutions.
We had commented less than three months ago that Nvidia’s shift towards liquid cooling for the first time for the high-end version of its DGX server subsystem, SuperPOD (built on Blackwell), was a pivotal moment for liquid cooling. Technology adoption now seems to accelerate fast, as the power consumption of the newest AI chips rises exponentially (Nvidia Blackwell uses more than 1,000 watts, compared to 700 watts for the previous H100), generating massive heat within data centers, and as data center power usage becomes a concern both in terms of operating costs and impact on the electric grid.
Super Micro estimates that its liquid cooling solutions can reduce data center power usage by up to 40%, hinting at massive savings for cloud operators as cooling accounts generally for 40% of data center energy consumption.
The take-off of liquid cooling, flagged by Super Micro, has also been noticed by technology research firm Dell’Oro that recently raised its market size estimate to $3.5 billion by 2028 (vs. $1.8 billion by 2027 previously) and expects the technology to account for nearly a third of all data center thermal management spending by 2028.
Overall, the explosive growth of liquid cooling should buoy the whole data center cooling segment, expected to grow at an annual rate of more than 40% by 2028, with now the risk clearly on the upside.
Even if cooling specialists such as Vertiv and Asia Vital have reacted negatively to the arrival of a new competitor (Super Micro) in liquid cooling, we keep viewing them as attractive plays in the AI space as a faster and stronger market take-off should offset any market share losses.