PUBLISHER: Fortune Business Insights Pvt. Ltd. | PRODUCT CODE: 1930291
PUBLISHER: Fortune Business Insights Pvt. Ltd. | PRODUCT CODE: 1930291
The global two-phase data center liquid immersion cooling market is witnessing strong growth driven by rising computational intensity, increasing adoption of AI workloads, and the urgent need for energy-efficient data center infrastructure. According to the report, the market was valued at USD 431.4 million in 2025 and is projected to grow from USD 496.7 million in 2026 to USD 1,612.4 million by 2034, registering a CAGR of 15.90% during the forecast period. North America dominated the global market with a 41.30% share in 2025.
Market Overview
Two-phase liquid immersion cooling is gaining traction as traditional air-cooling systems struggle to manage the heat generated by high-density servers, GPUs, and AI accelerators. This cooling technique immerses IT hardware in dielectric fluids that evaporate and condense, enabling superior heat dissipation and improved energy efficiency. The growing reliance on cloud computing, edge computing, hyperscale data centers, and advanced AI applications is significantly accelerating market demand.
Post-pandemic, global data consumption surged sharply, compelling enterprises and cloud service providers to invest in new data center infrastructure and advanced cooling technologies. This shift has further strengthened the adoption of two-phase immersion cooling solutions worldwide.
Impact of Generative AI
The rapid expansion of generative AI has profoundly influenced data center cooling requirements. AI workloads rely heavily on GPUs and specialized processors that generate extreme heat. Two-phase immersion cooling offers an effective solution by enabling higher rack density and reducing power consumption. Moreover, sustainability initiatives are pushing organizations toward energy-efficient cooling technologies that help reduce carbon footprints.
For instance, in May 2024, LiquidStack showcased its two-phase immersion cooling technology at Cisco Live, demonstrating its ability to support AI-driven optical networking systems efficiently and sustainably.
Market Trends
The market is benefiting from the expansion of hyperscale cloud data centers and 5G infrastructure. Major cloud service providers such as AWS, Microsoft Azure, and Google Cloud are investing heavily in advanced cooling systems to support AI, machine learning, and big data analytics. As per Synergy Research Group, the number of hyperscale data centers globally reached 1,136 in 2024, up from 734 in 2020, indicating strong long-term demand for immersion cooling solutions.
Market Dynamics
Drivers:
The rising need for energy efficiency, cost reduction, and space optimization is driving the adoption of two-phase immersion cooling. These systems support higher server densities while significantly lowering operational expenses and energy consumption compared to air cooling.
Challenges:
High initial capital investment and complex implementation remain major restraints. Retrofitting existing data centers requires infrastructure upgrades, specialized tanks, and compatible hardware, increasing costs. Environmental concerns related to dielectric fluids also pose regulatory challenges.
Opportunities:
Technological advancements such as synthetic and nanoparticle-infused fluids are improving thermal performance and environmental safety. These innovations are expected to reduce power usage further and improve scalability, creating significant growth opportunities.
By component, the solution segment dominates due to growing AI and GPU adoption, while services accounted for 29% market share in 2024.
By application, High-Performance Computing (HPC) holds the largest share, while the AI segment is projected to grow at a CAGR of 17.13%.
By cooling fluid, fluorocarbon-based fluids lead the market, whereas synthetic fluids are expected to grow at the highest CAGR of 17.91%.
By data center type, large data centers dominated with 84% market share in 2025.
By end user, cloud service providers remain the largest adopters, supported by rapid infrastructure expansion.
North America leads the market, valued at USD 203.2 million in 2026, driven by strong AI adoption and hyperscale data center growth.
Europe follows with a market size of USD 140.3 million in 2026, supported by energy efficiency regulations.
Asia Pacific is emerging rapidly, reaching USD 120.3 million in 2026, led by China, India, and Japan.
The Middle East & Africa market is growing due to heavy investments in digital infrastructure.
Competitive Landscape
The market is moderately consolidated, with the top five players holding 36-38% market share. Key companies include 3M, LiquidStack, Vertiv Holdings, GIGA-BYTE Technology, and The Chemours Company. Product launches, R&D investments, and strategic partnerships are the primary competitive strategies.
Conclusion
In conclusion, the two-phase data center liquid immersion cooling market is set for substantial expansion from USD 431.4 million in 2025 to USD 1,612.4 million by 2034, driven by AI proliferation, hyperscale data center growth, and rising energy efficiency requirements. Despite high initial costs, technological advancements and sustainability-focused innovations are expected to accelerate adoption across regions. As data centers continue to evolve toward high-density computing, two-phase immersion cooling will play a critical role in shaping the future of efficient and sustainable digital infrastructure.
Segmentation By Component
By Application
By Cooling Fluid
By Data Center Type
By End Users
By Region
Key Market Players Profiled in the Report Boyd (U.S.), Delta Electronics, Inc. (Taiwan), GIGA-BYTE Technology Co., Ltd. (Taiwan), Green Revolution Cooling Inc. (U.S.), LiquidStack Holding B.V. (U.S.), Mitsubishi Heavy Industries Group (Japan), 3M (U.S.), The Chemours Company (U.S.), Vertiv Holdings Co. (U.S.), and Wiwynn Corporation (Taiwan)