Data centres are at the heart of the digital revolution, powering everything from everyday business transactions to the latest breakthroughs in AI. Traditional air cooling is nearing its practical limits as chip densities, rack densities, compute power, AI workloads, and high-performance computing (HPC) requirements soar. Liquid cooling—a transformative technology- rapidly reshapes how modern IT infrastructure tackles heat and energy efficiency challenges. Today, data centres face significant challenges around sustainability, power deficiency and carbon footprint – driven by increasing global demand for digital services and infrastructure growth. In the rapidly evolving digital infrastructure landscape, liquid cooling has emerged as a transformative force, reshaping how modern data centers, enterprises and industrial applications manage thermal challenges. Today, the case for liquid cooling is not just compelling—it’s urgent, critical and central to strategies for efficiency, sustainability and next-generation computing.
What is Liquid Cooling?
Liquid cooling leverages the superior heat-absorbing properties of liquids—typically water or engineered fluids—to transfer heat away from critical IT hardware. A coolant circulates through cold plates or immersion baths, absorbing thermal energy directly from CPUs, GPUs, or entire servers, before being cooled in heat exchangers and recirculated.
How Liquid Cooling works
Unlike traditional air-based systems, liquid cooling relies on liquid, typically water or engineered fluids, with superior thermal properties to absorb and transport heat away from electronics.
- Direct-to-chip cooling: Liquid circulates through cold plates mounted directly on processors, capturing heat at its source.
- Immersion cooling: Entire servers or racks are submerged in non-conductive, dielectric fluids, offering uniform heat dissipation and 50% greater energy efficiency than air cooling.
- Hybrid and advanced approaches: Microchannel and micro convective technologies target thermal hotspots with greater granularity, while centralized heat exchangers and modular designs allow flexibility and scale.
The drive towards Liquid Cooling
Several trends are converging to make liquid cooling the default choice in 2025. The exponential rise in thermal output from next-generation chips has outpaced air cooling capabilities. In fact, industry analysts project that liquid cooling adoption in data centers will climb from 10% in 2024 to over 20% in 2025, marking a decisive tipping point from niche solution to mainstream necessity. Data center managers seek solutions offering superior thermal management, improved power usage effectiveness (PUE) and reduced operational costs. The rapid expansion of AI workloads, HPC clusters and dense rack deployments raises the stakes for efficient and scalable cooling systems. Sustainability imperatives and ESG goals further necessitate the need for greener, more resource-efficient operations, which liquid cooling is adept at.
Why Liquid Cooling is becoming essential
- Unmatched thermal efficiency: Liquid has approximately 3,500 times the heat transfer capacity of air, enabling reliable cooling of high-wattage components in smaller, denser form factors. With AI and HPC workloads regularly pushing rack densities to 80 kW and beyond, traditional fans are outmatched.
- Energy and space savings: Modern liquid cooling systems can reduce cooling energy consumption by up to 40% and enable sixfold increases in rack power density, squeezing more performance from the same space—both critical for facilities facing rising real estate and energy costs.
- Sustainability and cost advantages: Advanced liquid cooling cuts costs and supports companies' climate and sustainability pledges by lowering energy usage, reducing water consumption and extending equipment lifespans (up to 30% due to less thermal cycling and fewer failures). The return on investment is generally favorable, especially considering savings from deferred expansions and reduced cooling plant size.
- Reliability for extreme applications: Direct liquid cooling ensures stable operation even under the most intense workloads, lowering the risk of thermal throttling, downtime, or hardware failure in mission-critical environments—be it cloud hyperscalers, government-grade HPC clusters, or emerging smart city infrastructure.
Types and innovations in 2025
The last two years have seen rapid innovation in liquid cooling techniques:
- Direct-to-chip cooling: Robust, modular cold plates that efficiently extract heat from server CPUs/GPUs, increasingly paired with AI-driven thermal management for real-time adjustments
- Immersion cooling: Both single-phase (liquid remains liquid) and two-phase (liquid evaporates for heat removal) designs are gaining traction. Immersion dramatically reduces both operational and embodied energy while providing easy, modular scalability
- AI-Powered cooling: The integration of AI/ML algorithms optimizes pump speeds, manifold routing and heat exchanger parameters, continuously improving efficiency and preemptively addressing thermal hotspots
Foremost tech leaders like Microsoft, Google, and Meta are pioneering closed-loop, zero-waste liquid cooling systems. At the same time, collaborations between OEMs and fluid technology companies redefine best practices in sustainability and performance.
Market outlook and strategic importance
The global liquid cooling market is projected to soar from $4.68 billion in 2025 to over $22 billion by 2034, riding on demand for hyperscale AI computing and regional pushes for energy efficiency and green data centers. With advanced regulatory environments and rapid cloud infrastructure adoption, North America and Europe are leading the way. However, Asia-Pacific nations and fast-growing digital economies are quickly catching up, driven by 5G rollouts, e-sports and urban IoT deployments. This industry-wide momentum represents a strategic inflection point: what was once cutting-edge or experimental is now foundational for the data center industry’s evolution.
Overcoming barriers and the path forward
Despite its promise, there are factors to consider in adopting liquid cooling:
- Initial investment: Upfront costs can be higher than traditional systems, though ROI is often achieved through energy and space savings within 2-3 years.
- Operational changes: Facilities must adapt to new maintenance routines, leak detection and fluid management protocols.
- Skills and partnerships: There’s a growing need for training, standardization and collaboration between facility, IT and OEM teams to ensure reliable deployment and operation at scale
Yet, as the ecosystem matures, the total cost of ownership (TCO) continues to fall, technical hurdles are being efficiently addressed, and an expanding supply chain makes solutions easier to acquire and integrate.
Key takeaways for forward-looking Data Centres
Liquid cooling is no longer niche—it’s fast becoming necessary for organizations seeking to support AI, high-performance computing and sustainability mandates. The transition brings higher upfront costs and new design considerations but delivers long-term savings, improved reliability and the flexibility to scale IT environments for tomorrow’s demands.
Liquid cooling isn’t just a leap in thermal management—it’s a strategic enabler for energy-efficient, AI-ready and sustainable data centres of the future.
HCLTech: Delivering next-gen Liquid Cooling solutions: As a technology leader, HCLTech aligns with these trends through a commitment to advanced, sustainable cooling solutions that enable clients to
- Maximize compute density and performance for AI, cloud and edge deployments
- Drastically reduce energy consumption and carbon footprint
- Ensure reliability and uptime in the most demanding applications
- Future-proof infrastructure for emerging workloads
Through partnerships across the ecosystem and end-to-end expertise—from consulting to design, deployment and optimization, HCLTech stands ready to deliver integrated, future-ready liquid cooling portfolios at scale. In conclusion, the rise of liquid cooling in 2025 is a response to the new realities of high-density, AI-driven digital infrastructure. By embracing this change, organizations position themselves for success today and a brighter, greener, and more resilient tomorrow.
References:
https://flexpowermodules.com/the-basics-of-liquid-cooling-in-ai-data-centers
https://www.sciencedirect.com/science/article/abs/pii/S1359431124007804
https://digitalisationworld.com/blog/58197/2025-the-turning-point-for-advanced-liquid-cooling
https://www.consegicbusinessintelligence.com/liquid-cooling-systems-market
https://www.precedenceresearch.com/data-center-liquid-cooling-market
https://www.digitalrealty.asia/resources/articles/future-of-data-center-cooling
