Data Center Cooling Market

Data Center Cooling Market Size and Forecast

The global Data Center Cooling Market is valued at USD 17.21 Billion in 2024 and is projected to reach a value of USD 86.220 Billion by 2035 at a CAGR (Compound Annual Growth Rate) of 15.75% between 2025 and 2035.

Market Overview: Data Center Cooling Market

The Data Center Cooling Market refers to the technologies and solutions used to regulate temperature and remove excess heat from data centers, ensuring optimal performance, energy efficiency, and equipment longevity. As data centers continue to expand due to rising cloud computing, AI, and IoT adoption, the demand for advanced cooling solutions is increasing. These solutions range from traditional air-based cooling to advanced liquid cooling and immersion cooling systems, aimed at reducing energy consumption and improving sustainability.

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Sustainability as a Strategic Priority

Green cooling solutions are no longer optional. Leading operators like Microsoft and Facebook are experimenting with underwater data centers and adiabatic cooling to minimize water and energy use. The shift toward renewable energy-powered cooling systems will dominate corporate ESG agendas.

AI and Machine Learning Revolutionize Cooling

AI-powered thermal management tools, such as Google’s DeepMind, optimize cooling efficiency by predicting heat patterns and dynamically adjusting resources. This reduces energy consumption by up to 40% ~, making AI integration a critical competitive differentiator.

Edge Computing Drives Decentralized Cooling Demand

Edge data centers, often located in harsh environments (e.g., remote industrial sites), require rugged, low-maintenance cooling systems. Vendors like Vertiv and Schneider Electric are developing self-contained, liquid-cooled microdata centers for these applications.

Hyperscale Investments Fuel Market Growth

Hyperscalers (e.g., Amazon, Meta) account for 60% ~ of global Data Center Cooling spend. Their focus on scalability and PUE (Power Usage Effectiveness) optimization is pushing vendors to innovate in modular and prefabricated cooling solutions.

Regional Hotspots and Regulatory Impact

• North America: Leads the market (40% ~ share) due to tech advancements and high-density deployments. Strict emissions laws in California and Canada drive green cooling adoption.
• Asia-Pacific: Fastest-growing region (30% ~ CAGR) with China and India investing in mega-data hubs. Japan’s “Green Growth Strategy” mandates carbon-neutral data centers by 2030.
• Europe: Sustainability mandates like the Energy Efficiency Directive (EED) position the EU as a hub for liquid cooling innovation.

Segmentation of the Data Center Cooling Market

The Data Center Cooling Market is evolving rapidly, driven by the increasing demand for high-performance computing, cloud-based services, and sustainability initiatives. As data centers continue to expand, the need for efficient and cost-effective cooling solutions is growing. The market is segmented into various categories based on component, cooling type, data center type, industry vertical, and region. Each of these segments plays a crucial role in shaping the future of cooling technologies in data centers.

Segmentation by Component

The market is broadly categorized into solutions and services. Cooling solutions account for the majority share, comprising around 70% ~ of the market, as data centers require physical infrastructure such as air conditioning units, liquid cooling systems, and economizers. Among the solutions, air conditioning units and chillers are widely used, but newer liquid cooling technologies such as direct-to-chip cooling and immersion cooling are gaining popularity due to their energy efficiency and ability to handle high-performance workloads. Economizers and free cooling solutions are also witnessing significant adoption as they reduce energy consumption by utilizing ambient air or water for cooling.

On the other hand, services, which include consulting, installation, deployment, and maintenance, hold around 30% ~ of the market share. As data centers become more complex, operators are increasingly seeking expert guidance for optimizing their cooling infrastructure. The maintenance & support sub-segment is particularly crucial, as efficient cooling systems require continuous monitoring to prevent overheating, downtime, and equipment failures.

Segmentation by Cooling Type

Cooling technologies in data centers can be categorized into air-based cooling and liquid-based cooling. Air-based cooling is the most widely adopted, accounting for approximately 65% ~ of the market. This includes computer room air conditioning (CRAC) and air handling units (AHUs), which are the standard methods used in enterprise and colocation data centers. Chiller-based cooling systems are also common in large-scale data centers but are gradually being replaced by more energy-efficient alternatives.

Liquid-based cooling, which accounts for around 35% ~ of the market, is experiencing rapid growth, with an expected CAGR of over 15% ~ during the forecast period. The increasing use of AI, high-performance computing (HPC), and GPU-intensive workloads is driving the need for more efficient cooling systems. Direct-to-chip cooling, which delivers coolant directly to the hottest components of a server, is becoming a preferred solution in high-density environments. Similarly, immersion cooling, where entire servers are submerged in non-conductive liquid, is gaining traction due to its superior heat dissipation capabilities and potential for energy savings. As sustainability becomes a key focus, liquid cooling is expected to play a more significant role in future data center designs.

Segmentation by Data Center Type

The market is also segmented based on the type of data centers utilizing cooling solutions. Hyperscale data centers, which account for 55% ~ of the market, are the largest adopters of advanced cooling solutions. These massive facilities, operated by cloud service giants like Amazon Web Services (AWS), Google Cloud, and Microsoft Azure, require highly efficient cooling mechanisms to manage the vast amounts of heat generated by their servers. Many hyperscale data centers are integrating AI-driven cooling management to optimize power usage and reduce operational costs.

Colocation data centers, holding a 25% ~ market share, are also investing in efficient cooling technologies. Since these facilities house multiple tenants, they require scalable and energy-efficient cooling solutions. The shift toward modular and liquid cooling systems is becoming more prevalent in colocation centers to meet customer demands for sustainability and reduced energy costs.

Enterprise data centers, which make up about 15% ~ of the market, still rely on traditional air-based cooling solutions. However, as many enterprises migrate to the cloud, those maintaining their own infrastructure are investing in high-efficiency air and liquid cooling solutions to extend the life of their existing facilities.

Edge data centers, though currently holding only 5% ~ of the market, are the fastest-growing segment, with a projected CAGR of 18% ~. The rise of 5G networks, IoT, and real-time processing is driving the demand for compact, high-performance cooling solutions designed for small, decentralized data centers. Edge data centers are expected to rely heavily on liquid cooling due to space constraints and high-performance requirements.

Segmentation by Industry Vertical

Different industries have varying requirements for Data Center Cooling, with IT & telecom leading the market at 40% ~ share. The rapid growth of cloud computing, artificial intelligence, and data-intensive applications is driving massive investments in cooling technologies. The telecom sector, in particular, is expanding its data center infrastructure to support 5G, IoT, and streaming services, which require high-density computing and efficient cooling mechanisms.

The banking, financial services, and insurance (BFSI) sector, which holds 15% ~ of the market, relies heavily on energy-efficient and secure cooling systems to maintain seamless digital transactions and financial operations. With financial institutions increasingly adopting AI-driven risk analysis and fraud detection, the need for high-performance cooling solutions is growing.

The healthcare sector (10% ~) is also a significant adopter of Data Center Cooling solutions. The rise of AI-based diagnostics, medical imaging, and electronic health records (EHRs) is increasing the need for efficient cooling in medical data centers. Government regulations such as HIPAA and GDPR are also influencing healthcare organizations to optimize their Data Center Cooling systems to ensure data integrity and compliance.

Other major industries utilizing Data Center Cooling include government & defense (10% ~), retail & e-commerce (8% ~), and manufacturing (7% ~). The demand for secure, high-performance computing in national security is driving investments in advanced cooling systems in the government and defense sector. Meanwhile, e-commerce platforms such as Amazon and Alibaba require scalable cooling solutions to handle massive online transactions and data analytics. The manufacturing sector, with the rise of Industry 4.0 and smart factories, is also contributing to the demand for efficient cooling solutions in edge data centers.

Data Center Cooling Market Segments Covered in the report:

By Component

• Solution
  • Air-Based Cooling
    • Chilled Water Systems
    • Air Conditioning Units (CRAC & CRAH)
    • Evaporative Cooling
    • Free Cooling
  • Liquid-Based Cooling
    • Direct-to-Chip Liquid Cooling
    • Immersion Cooling
• Services
  • Consulting
  • Installation & Deployment
  • Maintenance & Support

By Cooling Technique

• Airflow Management
• Liquid Cooling
• Evaporative Cooling
• Free Cooling
• Refrigerant-Based Cooling

By Data Center Type

• Enterprise Data Centers
• Colocation Data Centers
• Hyperscale Data Centers
• Edge Data Centers

By Industry Vertical

• IT & Telecom
• BFSI (Banking, Financial Services & Insurance)
• Government & Public Sector
• Healthcare & Life Sciences
• Energy & Utilities
• Retail & E-commerce
• Manufacturing
• Media & Entertainment
• Others

By Cooling Structure

• Room-Based Cooling
• Row-Based Cooling
• Rack-Based Cooling

By Geography

• North America
  • U.S.
  • Canada
  • Mexico
• Europe
  • U.K.
  • Germany
  • France
  • Rest of Europe
• Asia-Pacific
  • China
  • India
  • Japan
  • South Korea
  • Rest of Asia-Pacific
• Latin America
  • Brazil
  • Mexico
  • Rest of Latin America
• Middle East & Africa
  • GCC Countries
  • South Africa
  • Rest of MEA

Market Dynamics (DROs)

Drivers

• Surging Demand for Data CentersThe exponential growth of cloud computing, IoT, AI, and big data analytics has driven the proliferation of hyperscale and colocation data centers. Global data traffic is projected to grow at a CAGR of 25% ~ through 2025, necessitating robust cooling infrastructure to handle increasing heat loads.
• Energy Efficiency ImperativesCooling accounts for ~40% ~ of a data center’s energy consumption. Rising operational costs and regulatory pressures (e.g., EU Climate Neutral Data Centre Pact) are pushing operators to adopt energy-efficient solutions like liquid cooling, free cooling, and waste heat reuse.
• High-Density Computing RequirementsAI workloads, high-performance computing (HPC), and 5G edge deployments generate intense heat, rendering traditional air cooling ineffective. Liquid and immersion cooling systems are gaining traction for their ability to manage heat densities exceeding 50 kW per rack.
• Sustainability RegulationsGovernments and organizations are mandating carbon-neutral operations. For instance, the U.S. Department of Energy’s “Better Buildings Initiative” incentivizes green cooling technologies, accelerating market adoption.

Restraints

• High Capital and Retrofit CostsAdvanced cooling systems (e.g., immersion cooling) require significant upfront investment. Retrofitting legacy facilities with modern infrastructure is complex and costly, deterring small-scale operators.
• Operational ComplexityLiquid cooling integration demands specialized expertise and redesigns of existing data center layouts. Concerns around maintenance, leaks, and compatibility with legacy hardware further hinder adoption.
• Limited Awareness in Emerging MarketsIn regions like Southeast Asia and Africa, reliance on conventional cooling methods persists due to a lack of technical knowledge and financing options for cutting-edge solutions.

Opportunities

• Edge Computing ExpansionThe rise of edge data centers (predicted to grow at 22% ~ CAGR by 2030) creates demand for compact, decentralized cooling systems tailored for localized deployments.
• Hybrid Cooling SolutionsCombining air and liquid cooling offers a balanced approach for mixed-density environments. Vendors are innovating modular, scalable systems to cater to diverse workloads.
• Emerging EconomiesCountries like India, Brazil, and South Africa are investing in digital infrastructure, with governments launching initiatives like India’s “Digital India” to bolster data center construction.
• Technological InnovationsAI-driven predictive cooling, two-phase immersion systems, and advanced refrigerants (e.g., dielectric fluids) present lucrative R&D opportunities. Partnerships between cooling providers and hyperscalers (e.g., Google, AWS) are also unlocking new use cases.

Regional Analysis of the Data Center Cooling Market

The Data Center Cooling Market is experiencing rapid global expansion, driven by increasing data consumption, cloud adoption, and advancements in AI and high-performance computing. Each region has distinct factors influencing its growth, including regulatory policies, technological adoption, and investment in sustainable cooling solutions. Below is a detailed analysis of key regional markets shaping the industry through 2035.

North America: Market Leader with Advanced Cooling Innovations

Market Share & Growth Drivers

North America currently dominates the global Data Center Cooling market, accounting for approximately 40% ~ of the total market share. The United States and Canada are home to the largest hyperscale data centers operated by companies like Amazon Web Services (AWS), Google Cloud, Microsoft Azure, and Meta, which are major investors in AI-powered cooling and liquid cooling technologies. The region’s market is expected to grow at a CAGR of 10% ~ from 2024 to 2035, driven by factors such as:

• High concentration of hyperscale and colocation data centers.
• Rapid adoption of AI and high-performance computing (HPC), leading to increased thermal loads.
• Regulatory push for energy efficiency and sustainability initiatives like the U.S. Department of Energy's Better Buildings Challenge and carbon neutrality goals.

Key Trends & Technologies

• Liquid Cooling Boom: Direct-to-chip and immersion cooling are expected to see over 20% ~ adoption by 2030, particularly in AI-driven workloads.
• AI-Driven Cooling Optimization: Companies are integrating machine learning algorithms to optimize cooling efficiency, reducing energy consumption by up to 30% ~.
• Sustainable Cooling Solutions: With states like California enforcing stringent power usage effectiveness (PUE) regulations, North American data centers are increasingly investing in free cooling, renewable-powered cooling systems, and advanced economizers.

Europe: Sustainability-Driven Growth & Green Data Centers

Market Share & Growth Drivers

Europe is the second-largest market, holding 25% ~ of the global share. The region's growth is primarily fueled by the EU’s strict carbon neutrality targets, which mandate sustainable cooling adoption. Key data center hubs include Germany, the UK, the Netherlands, France, and Ireland. The market is projected to grow at a CAGR of 11% ~ from 2024 to 2035.

Key Trends & Technologies

• Green Data Centers on the Rise: Europe leads in free cooling solutions, utilizing natural air and water-based cooling to reduce reliance on mechanical cooling.
• Government Policies Driving Innovation: The European Green Deal and initiatives like the Climate Neutral Data Centre Pact (CNDCP) are accelerating the shift to energy-efficient cooling.
• District Heating Integration: Countries like Denmark and Sweden are utilizing waste heat from data centers to power residential heating systems, reducing carbon footprints.
• Liquid Cooling Expansion: Increasing AI and HPC adoption is driving immersive cooling adoption, particularly in financial and research institutions.

Asia-Pacific: Fastest-Growing Market with Massive Data Center Expansion

Market Share & Growth Drivers

Asia-Pacific is the fastest-growing region, expected to expand at a CAGR of 13% ~+ through 2035. Currently holding 20% ~ of the global market share, the region is driven by the rapid growth of cloud computing, 5G deployment, IoT, and AI-driven applications. Key markets include China, India, Japan, South Korea, and Singapore.

Key Trends & Technologies

• Hyperscale Data Center Expansion: China leads in new data center development, while India and Southeast Asia are emerging as alternative data hubs due to rising internet penetration and digital transformation efforts.
• Government Initiatives for Green Cooling: Countries like Singapore have imposed cooling efficiency mandates, encouraging low-carbon cooling technologies such as liquid cooling and AI-based thermal management.
• AI-Powered Smart Cooling: Japan and South Korea are integrating machine learning in cooling systems, enabling predictive temperature adjustments to reduce energy waste.
• Growth in Liquid Cooling: With HPC and metaverse-related computing loads increasing, direct-to-chip and immersion cooling technologies are projected to gain a 15% ~ market share by 2030 in Asia-Pacific.

Latin America: Emerging Market with Increasing Colocation Investments

Market Share & Growth Drivers

Latin America accounts for 8% ~ of the global market but is experiencing steady growth with a projected CAGR of 9% ~. Countries like Brazil, Mexico, Chile, and Argentina are seeing increased investments in colocation and cloud data centers, as businesses shift to digital operations.

Key Trends & Technologies

• Rising Colocation Data Centers: With cloud service providers expanding in Latin America, demand for modular and scalable cooling solutions is increasing.
• Adoption of Free Cooling: Data centers in cooler regions like Chile are leveraging natural air cooling to improve efficiency.
• Liquid Cooling Trials: Though still at an early stage, direct liquid cooling is being tested in select high-density data centers to reduce power consumption.
• Energy Efficiency Regulations on the Rise: Governments are beginning to implement data center energy-efficiency policies, encouraging sustainable cooling investments.

Middle East & Africa: Emerging Market with Smart City & AI Growth

Market Share & Growth Drivers

The Middle East & Africa (MEA) market holds 7% ~ of the global market but is one of the fastest-growing regions, with a projected CAGR of 12% ~ through 2035. The increasing adoption of smart city initiatives, AI-driven applications, and cloud services is driving the need for efficient and scalable cooling solutions. Major data center investments are happening in UAE, Saudi Arabia, South Africa, and Nigeria.

Key Trends & Technologies

• Expansion of AI & Cloud Services: Major cloud providers like Microsoft and AWS are setting up hyperscale data centers in the Middle East, requiring advanced cooling solutions.
• High-Temperature Challenges Driving Innovation: Due to extreme desert climates, data centers in the Middle East are investing in evaporative cooling, immersion cooling, and hybrid cooling systems.
• Government-Backed Sustainability Initiatives: The UAE and Saudi Arabia are launching green data center projects to align with their Net Zero carbon commitments.
• Growth in Edge Data Centers: Africa’s rising mobile internet adoption and fintech expansion are creating demand for compact, energy-efficient edge data centers with advanced cooling solutions.

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Key Players and Analysis of the Data Center Cooling Market

The key players in the global Data Center Cooling market include - Vertiv, Nortek Air Solutions, LLC, RITTAL GmbH & Co. KG, ASETEK, Airedale International Air Conditioning Ltd., Hitachi, Ltd., Schneider Electric SE, Fujitsu Ltd, Black Box Corporation, Stulz GmbH among others.

The Data Center Cooling Market is a dynamic and highly competitive sector, with several key players innovating to address the growing demands of modern data centers. As the need for high-performance computing, cloud services, and AI-driven applications increases, efficient and sustainable cooling solutions have become essential. Among the most prominent players in this market are Schneider Electric, Vertiv, Rittal, STULZ, Emerson Electric Co., Asetek, and Honeywell International. These companies lead the way in offering a diverse range of cooling technologies, including air-based, liquid cooling, and advanced AI-powered thermal management systems.

Schneider Electric stands out as a leader in the Data Center Cooling market, providing integrated cooling solutions such as precision cooling systems, free cooling, and liquid cooling technologies. The company has a strong focus on sustainability, developing products like EcoStruxure™, which optimize energy usage and cooling efficiency for hyperscale data centers. Vertiv, another key player, specializes in precision cooling systems, air handlers, and liquid cooling solutions. The company’s focus on AI-driven cooling for real-time temperature adjustments and predictive management of thermal loads has earned it a solid position in both hyperscale and colocation markets. Rittal, a global provider of cooling solutions, has developed modular and scalable systems that cater to medium-sized data centers. The company’s offerings include in-row cooling and liquid cooling systems, which help improve energy efficiency in both colocation and enterprise data centers.

STULZ is known for its innovative air conditioning and precision cooling solutions, focusing on direct expansion (DX) cooling, chilled water systems, and air-to-air heat exchangers. The company’s expertise in providing highly reliable, energy-efficient cooling systems for hyperscale data centers is a key differentiator. Emerson Electric Co. brings its expertise in thermal management, offering chillers, energy-efficient precision cooling, and AI-based thermal management systems that help data centers optimize energy consumption. Their Liebert brand is particularly known for offering high-performance cooling solutions that meet the stringent energy-efficiency demands of modern data centers.

Asetek has carved out a niche in liquid cooling technologies, offering solutions such as direct-to-chip and immersion cooling to address high-density workloads. With the rise of AI, HPC, and gaming, Asetek’s liquid cooling solutions are gaining traction in data centers that require efficient, high-performance thermal management. Honeywell International, another significant player, provides cutting-edge cooling technologies that include evaporative cooling, next-generation refrigerants, and smart thermal management systems. Their focus on sustainability and energy-efficient systems aligns with the growing demand for green data centers worldwide.

The Data Center Cooling market is experiencing significant shifts as the demand for sustainability and energy efficiency intensifies. With stricter regulatory pressure on energy consumption and a heightened focus on reducing carbon footprints, companies are increasingly turning to liquid cooling solutions. AI-powered cooling technologies are also a key trend, with machine learning systems helping data centers optimize energy use, improve cooling efficiency, and enhance operational performance. As these advancements continue, companies like Schneider Electric, Vertiv, and Emerson are positioned to lead the market, offering innovative solutions to meet the demands of modern, high-density data centers.

Regional expansion is another key strategy for these players. As emerging markets in Asia-Pacific, Latin America, and the Middle East experience rapid growth in data center investments, companies are establishing a stronger presence to capture market share. Schneider Electric, Vertiv, and STULZ have been particularly active in these regions, leveraging their advanced cooling technologies to support the growing demand for hyperscale data centers, edge computing, and cloud services. Partnerships and acquisitions are also common strategies to expand market share, as these companies look to tap into the burgeoning demand for cooling solutions in new markets.

Recent Developments:

• October 2024 - Schneider Electric's Acquisition of Motivair Corp: Schneider Electric announced the acquisition of a 75% ~ controlling stake in Motivair Corp, a U.S.-based liquid cooling specialist, for approximately $850 million. This move aimed to enhance Schneider's offerings in the rapidly expanding data center market, particularly in direct-to-chip liquid cooling and high-capacity thermal systems.
• September 2024 - Vertiv's Stock Performance: Vertiv's stock experienced a significant drop due to concerns over AI platform costs and tariff issues. Despite this, analysts maintained a positive outlook, suggesting that the stock's valuation remains attractive with projected long-term earnings per share growth above 20% ~.
• August 2024: Johnson Controls' Earnings Report: Johnson Controls, a provider of heating, ventilation, and air conditioning (HVAC) solutions, reported solid first-quarter fiscal results, with adjusted earnings per share of 64 cents and sales of $5.4 billion, surpassing Wall Street expectations. The company also revised its financial guidance for fiscal 2025, projecting earnings per share between $3.50 and $3.60.
• July 2024 - Vertiv's Financial Performance: Vertiv reported significant gains in its second-quarter earnings, with sales growing by 13% ~ and earnings by nearly 50% ~. Despite a 14% ~ stock decline, analysts maintained a positive outlook on Vertiv’s future performance, citing strong operational margins and increasing order growth.
• June 2024 - Omdia's Market Forecast: Omdia projected that the data center thermal management market would reach $16.87 billion by 2033, with a robust CAGR of 18.4% ~ until 2028, driven largely by AI-driven demands and innovations in high-density infrastructure.