Google Eyes China for AI Data Center Cooling Deals

Google is in talks with Chinese companies, including Envicool, to source liquid cooling systems for its data centres, according to people familiar with the development.

The discussions come after a recent visit by Google’s procurement team from Taiwan to China. During the trip, the team met Envicool and is also expected to hold talks with at least one more supplier.

Liquid cooling has become essential for modern AI data centres. Unlike traditional air cooling, these systems use liquids to manage heat generated by high-performance chips used in artificial intelligence workloads. As AI demand rises globally, the need for efficient cooling solutions has increased sharply.

The talks highlight growing supply pressure in the AI infrastructure sector. While much attention has been on chip shortages, cooling components are also becoming a critical part of the supply chain.

A report by JPMorgan estimates that the global market for AI server liquid cooling systems could exceed $17 billion in 2026, up from $8.9 billion last year. This growth is driven by strong demand from companies like Nvidia and major cloud service providers.

Founded in 2005, Envicool is currently valued at around $14 billion. The company reported a 40% increase in revenue during the first nine months of the year. It has also developed a coolant distribution unit (CDU) tailored to meet Google’s requirements. This unit plays a key role in delivering cooling liquid directly to server racks.

Envicool is expanding its production capacity in China’s Guangdong province and is also setting up new facilities in Thailand and the United States to meet rising global demand.

The liquid cooling market remains highly fragmented, with several players supplying different components. Chinese firms such as Lingyi iTech and Feilong Auto Components are gaining market share, along with server maker Lenovo.

At the same time, Taiwanese companies like Foxconn, Auras Technology, and Delta Electronics continue to be key suppliers for Google in Asia.

Other Chinese firms benefiting from the AI boom include optical component makers Innolight and Eoptolink, as well as PCB manufacturer Victory Giant Technology, which supplies to both Nvidia and Google.

These developments show how the global race to expand AI infrastructure is increasing dependence on a wide network of suppliers, including those in China, despite ongoing geopolitical tensions.