China's Liquid Cooling Market Heats Up

In recent times, the surge of liquid cooling technology within China's server market has become a beacon of growth, embodying the spirit of innovation and progressThe numbers speak for themselves: during the first half of 2024, the market for liquid-cooled servers in China is anticipated to witness a staggering 98.3% year-on-year growth, reaching a scale of approximately $1.26 billion, with shipment volumes experiencing an impressive increase of 81.8%. It is projected that from 2023 to 2028, the compound annual growth rate for liquid-cooled servers in China could soar to an astounding 47.6%, leading the market to potentially reach a colossal $10.2 billion by 2028. This escalated trajectory of growth may seem coincidental; however, it is evidently the result of numerous interrelated factors aligning with the growing demand for energy-efficient technologies within the digital economy, artificial intelligence advancements, and initiatives focused on carbon neutrality.

The ascension of liquid cooling technologies indicates a pivotal shift in the industry's perspective, with certain sectors taking the initiative to adopt these technologies, resulting in a spike in demand

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Vendors specializing in liquid cooling are also stepping up their strategies in preparation for expanding market opportunities, setting the stage for China’s liquid cooling sector to experience unprecedented growthHowever, as vibrant as this market may seem, it is not without its challengesIssues such as product complexity, a lack of standardized protocols, and fragmented ecosystems pose significant hurdlesAs a leader in the liquid cooling industry, Inspur Information is keenly aware of these obstaclesEmbracing a user-centric approach driven by innovative technological advancements, the company collaborates with partners across the supply chain to establish standards and build a cohesive ecosystem, striving for sustainable growth within China's liquid cooling sector.

Unlike conventional air cooling technologies, liquid cooling utilizes fluids as the medium to dissipate heat from critical components in data centers

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This advanced technique is increasingly recognized as a vital solution for meeting the thermal management demands posed by high-density, high-power workloads, thus contributing significantly to the energy-saving and emission-reduction goals of modern data centers.

China's liquid cooling server market has observed rapid expansion, and the momentum shows no sign of slowingThe first half of 2024 has already demonstrated significant growth potential, with expectations that the total shipment of liquid-cooled servers for the year could hit around 230,000 unitsThe factors fueling this acceleration include rising component costs, expedited infrastructure updates, and increased investments in intelligent computing setups, prompting industries to shift their procurement cycles for liquid-cooled servers ahead of schedule, further amplifying market growth.

Three major trends are emerging within the Chinese liquid cooling market

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First, cold plate-based liquid cooling has established itself as the dominant technology, accounting for over 95% of market shareIt benefits from its maturity, ease of operation, minimal reconstruction needs, and significant cost advantages, making it the ideal choice for the present and foreseeable futureSecond, the burgeoning market has attracted a multitude of vendors, consolidating the top three players who command more than 80% of the total market share, with Inspur Information standing as the indisputable leader, holding over 50% of the marketThird, there is a growing acceptance of liquid cooling technologies across various sectors, positioning the internet industry as the forerunner in embracing these innovationsNotably, this sector alone represents 60% of the liquid cooling server market in the first half of 2024, with leading internet companies expressing strong demand for liquid cooling solutions while other sectors such as telecommunications, finance, and education are actively validating technological capabilities.

It is evident that the increasing scale and energy consumption of data centers necessitate the widespread adoption of liquid cooling technologies

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However, the rapid growth of the market has also amplified challenges related to unstandardized practices and a fragmented ecosystemThe journey toward industrialization within the liquid cooling sector remains arduous.

One of the most pressing issues confronting the liquid cooling industry relates to standardizationThe absence of uniform standards significantly hinders the deployment and adoption of liquid cooling technologiesThe complexity of the liquid cooling technology chain, which encompasses a wide array of devices, components, and interfaces, contributes to a lack of standardizationFurthermore, the relationship between industry standards and market scale is crucial; as the shipping volumes of liquid cooling servers remain relatively modest during the initial stages of industrialization, the absence of a cohesive framework for technology paths, specifications, and standards becomes increasingly pronounced as market size escalates.

Moreover, variations in data center environments across different sectors lead to diverse perceptions and demands for liquid cooling technologies among industry users, which profoundly influences the procurement of relevant products and consequently affects the development of standards

For instance, telecommunications operators with extensive data center resources are advocating for liquid cooling technologiesA 2023 white paper released by the three major operators articulated a development vision spanning three years: initiating technological validation in 2023, progressing to large-scale testing in 2024, and advancing to widespread applications by 2025. As they advocate for liquid cooling solutions, these operators emphasize the need for components to be decoupled, addressing the issues presented by inconsistencies in industry standards that impede interoperability between various components and interfaces, thereby driving the need for standardized practices.

Similarly, the financial sector is quick to adopt advanced technologies such as AIGC, which fuels a heightened demand for AI servers and contributes to accelerated energy consumption, amplifying the urgency for energy conservation strategies

Initiated as far back as 2019, pilot programs for liquid-cooled data centers within the finance industry are now set to expand existing facilitiesA critical requirement for financial entities is the heightened security surrounding data, necessitating strict standards for liquid-cooled data centers that ensure rigorous testing and quality control, ultimately enhancing the reliability of these systems.

Thus, standards serve as a unifying language for the industry and are foundational for its long-term developmentA deficiency of standardized practices can lead to product incompatibility, fragment the ecosystem, and exacerbate user costsAs highlighted by IDC, the current phase of the liquid cooling market marks its nascent stages, requiring collaborative efforts from organizations, institutions, and companies involved in the industry to forge appropriate standards conducive to liquid cooling's progress while fostering productive collaborations between academia and industry.

To accelerate the standardization of the liquid cooling market and drive it toward sustainable growth, an application-oriented approach must be employed

The vibrant application market within China presents an ideal environment for continual iterations and refinements of liquid cooling technologies and productsFront-runner companies in the sector should take the lead, exemplifying industry dynamics and shaping the progression of the supply chain.

Inspur Information serves as a prime example of a pioneer championing the cause of liquid coolingAs early adopters of an 'All in Liquid Cooling' strategy within the server manufacturing sector, they have established a comprehensive portfolio of liquid cooling technologies, amassing over 500 patents across various specializations, including cold plate, heat pipe, and immersion cooling methodsThrough delivering end-to-end services—from initial consultation and custom equipment development to final delivery and deployment—inspur meticulously crafts optimal lifecycle solutions for liquid cooling.

Moreover, Inspur has constructed the largest dedicated liquid cooling R&D and production base in Asia, establishing comprehensive capabilities encompassing research, testing, production, quality control, and delivery, exemplifying high-quality and standardized output with an annual production capacity exceeding 300,000 units.

Furthermore, the interrelationship between industry standards and market expansion must be prioritized

The establishment and unification of industry standards are urgent necessitiesCollaboration amongst liquid cooling server manufacturers is essential to cultivate a robust market.

Reflecting on data center operations, the introduction of liquid cooling technologies increases the number of components and equipment, thereby intensifying the complexities of safety managementTherefore, the industry should expedite the development of relevant operational standards, which will enhance user confidence regarding liquid cooling safety, expediting its widespread adoption.

As a key participant in various open computing organizations such as OCP, ODCC, Open19, and OCTC, Inspur has emphasized the importance of standardization involvementIt has helped spearhead the compilation and publication of over ten design and technology standards associated with both cold plate-based and immersion liquid cooling, including the foundational guidelines for cold plate core components in China, alongside spearheading the formulation of national standards for modular data centers.

Thirdly, technological innovation and industry collaboration within the realm of liquid cooling need to remain closely aligned with demand dynamics

Despite its advantages, liquid cooling technology is not without its imperfections, with concerns over leakage during the circulation process, challenges regarding CDU's cooling capacity distribution, and issues linking various components remaining areas ripe for improvement.

For instance, concerns over leakage persist as a main barrier to user adoptionIn response, Inspur has dedicated efforts to innovate solutions by developing a liquid-ring vacuum CDU that breaks the previous reliance on high-pressure pumps, facilitating fluid circulation using vacuum pumps and various sensors to control multiple functionalitiesThis innovation simplifies the technology while significantly enhancing reliability.

In the era of AIGC, the demand for deployment density across various IT resources has notably increased, with extensive trials exploring CPU and GPU liquid cooling solutions, but less focus on high-power memory and solid-state drives

A key milestone was achieved in January 2024, when Inspur, in collaboration with Intel, launched the world's first fully liquid-cooled cold plate server reference design, achieving 100% liquid cooling for primary heat-generating components like CPU, high-power memory, and NVMe drives, reaching an exceptional PUE value close to 1, propelling exploration into this emerging technology domain.

Furthermore, China is home to a myriad of aging data centers that are limited by their original designs, with structural constraints rendering them unsuitable for pure liquid cooling upgradesA promising solution for these traditional data centers is a hybrid approach combined with air and liquid cooling systems.

In summary, IDC projects that optimistically, the liquid cooling sector will mature within the next two to three years, marked by scaling up to substantial levels, widespread cross-industry adoption, and increased global acceptance