Key Highlights
- Google’s Taiwan-based procurement division traveled to China for meetings with liquid cooling equipment manufacturers, including Envicool
- Global availability of liquid cooling components faces constraints as AI data center construction intensifies worldwide
- Industry forecasts predict the AI server liquid cooling sector will reach $17 billion by 2026, nearly doubling from $8.9 billion in 2025
- Envicool demonstrated a custom-designed coolant distribution unit matching Google’s technical requirements at a recent trade exhibition
- Goldman Sachs reports Envicool anticipates sequential quarterly revenue expansion in liquid cooling, with possible Google contracts under consideration
Google faces a critical cooling challenge that has brought the tech giant to China. Representatives from the company’s Taiwan operations traveled to mainland China earlier this month to engage with manufacturers of liquid cooling systems designed for data center applications.
According to two individuals with direct knowledge of the meetings, Google’s team held discussions with Envicool, a Shenzhen-headquartered cooling technology firm. A third source indicated additional meetings with at least one more supplier remain scheduled. Both Google and Envicool declined to provide statements when contacted.
Liquid cooling technology works by circulating water or specialized fluids directly through or around computing hardware. Modern AI data centers generate intense heat due to densely packed processors running demanding workloads, making traditional air cooling methods inadequate.
This procurement mission highlights the widespread supply constraints affecting the entire data center ecosystem. The shortage extends beyond cutting-edge semiconductor chips to encompass essential infrastructure components like cooling hardware.
Rapid Market Expansion
JPMorgan projects the worldwide AI server liquid cooling systems market will experience explosive growth, expanding from $8.9 billion in 2025 to exceed $17 billion in 2026. This surge stems from Nvidia deployments and major cloud platforms introducing proprietary AI processors.
Envicool began operations in 2005 and currently commands a market valuation approaching $14 billion. The company reported revenue growth of 40% during the initial three quarters of last year. At a recent industry conference, Envicool showcased a coolant distribution unit (CDU) — the critical component responsible for delivering coolant to server racks — engineered precisely to Google’s technical specifications.
Goldman Sachs published analysis following a recent analyst conference call with Envicool, noting the manufacturer anticipates quarter-over-quarter liquid cooling revenue growth throughout the current year. Fifth-generation CDU orders from Google remain under active discussion.
Envicool continues territorial expansion with plans for a manufacturing facility in Guangdong province, alongside development projects in Thailand and the United States.
Chinese Manufacturers Capture Market Share
Chinese cooling equipment producers have established stronger positions in the liquid cooling sector, supported by robust domestic demand. Massive data center construction projects throughout China have enabled these manufacturers to achieve economies of scale and competitive pricing.
Major participants include Lingyi iTech and Feilong Auto Components, along with server manufacturers such as Lenovo. The cooling market remains highly fragmented, with numerous companies specializing in distinct components of complete cooling solutions.
Taiwanese companies maintain significant supply relationships with Google throughout Asia. Foxconn, Auras, and Delta Asia currently deliver cooling components to the tech giant. Chinese manufacturers appear positioned to capture incremental orders as supply chain pressures intensify.
Additional Chinese technology firms benefiting from AI data center expansion include optical transceiver producers Innolight and Eoptolink. Printed circuit board specialists like Victory Giant Technology count both Nvidia and Google among their customer base.
Wall Street analysts maintain a Strong Buy consensus rating on GOOGL stock, reflecting 26 Buy recommendations and six Hold ratings issued during the past three months. The consensus price target of $376.57 suggests approximately 23% potential appreciation from present trading levels.
