Data Center Chillers Market Analysis

Data Center Chillers Market Analysis

Based on product, the market is segmented into air-cooled chillers, water-cooled chillers, and glycol-cooled chillers. The water-cooled chillers segment holds around USD 600 million market revenue in 2023. These chillers lead the market primarily due to their superior efficiency and performance in large-scale cooling applications. Positioned as a key solution in managing high heat loads in data centers and industrial processes, water-cooled chillers offer enhanced cooling capacity and energy efficiency compared to other types. Their ability to provide consistent and reliable cooling makes them essential for handling the significant heat output of extensive equipment and server arrays. This efficiency aligns with the growing demand for effective cooling solutions in large data centers and commercial applications, reinforcing the dominance of water-cooled chillers in the market.
 

Based on data center size, the data center chillers market is categorized into small data center, medium data center, large data center, and hyperscale data center. The large data center segment led the market with around USD 450 million market revenue in 2023. The market growth is driven by the substantial demand for robust cooling solutions driven by the growing data needs of enterprises. Large data centers require high-capacity cooling systems to manage the significant heat loads generated by extensive server arrays. This need for efficient and scalable cooling solutions is a key factor behind the dominance of these data centers.
 

Additionally, as businesses increasingly prioritize data processing and storage efficiency, large data centers become pivotal in meeting these demands, further strengthening their leading position in the market. For instance, in May 2024, LG Electronics announced to supply a cooling system to a large-scale U.S. data center currently under construction. This contract includes more than 100 chillers with a total capacity of up to 50,000 tons of refrigeration. LG’s entry into the U.S. data center market coincides with the surge in demand driven by AI advancements, emphasizing the need for high-performance cooling systems.
 

North America dominated the global market with a major share of around 35% in 2023. The data center chillers market growth is driven by well-established technology infrastructure and significant investments in data center expansions in the region. Countries such as U.S. dominance is driven by its early adoption of advanced cooling technologies and a high concentration of hyperscale data centers requiring robust and efficient chiller systems. Additionally, key players focus on market expansion and a favorable regulatory environment for technology advancements further bolster the region’s position.

For instance, in November 2023, Microsoft announced a USD 500 million investment to expand its hyperscale cloud computing and AI infrastructure in Quebec. This expansion increases Microsoft's local cloud infrastructure footprint by 750% across Canada over the next two years and boosts Quebec’s computing capacity by 240% over the next three years. This investment in data centers is further expected to support the demand for chillers in the country.
 

Moreover, Asia is rapidly growing in the data center chiller market due to the booming digital infrastructure and increasing data demands in countries such as China and India. The expansion of hyperscale and colocation data centers, coupled with regional investments in advanced cooling solutions, drives market growth. Additionally, Europe data center chiller market is driven by its commitment to sustainability and energy efficiency. Strict environmental regulations and a focus on green technologies fuel the demand for eco-friendly chillers across major data center hubs.