Google procurement team has met with Envicool, sources say
Visit to mainland China reflects tight supply conditions in Taiwan
Global market for liquid cooling systems seen nearly doubling this year
BEIJING/SINGAPORE, March 17 (Reuters) - Alphabet's Google GOOGL.O is in talks with Envicool 002837.SZ and other Chinese firms about buying liquid cooling equipment for data centres, according to people with knowledge of a visit to China by one of the U.S. firm's procurement teams.
Liquid cooling systems - which circulate water or other liquid over or around equipment - have become critical in AI data centers as the high-density computing generates more heat than a traditional air cooling system can handle.
The visit by the team from Google's Taiwan operations this month reflects tight supply of parts for such systems, the sources said.
During the visit, Google's team has met with Envicool, said two of three sources, who were not authorised to speak to media and declined to be identified. The team also plans to meet with at least one other company, according to a separate source.
Neither Google nor Shenzhen-based Envicool replied to Reuters requests for comment.
The talks highlight how the global race to build AI data centre infrastructure has tightened supply of not just advanced chips but also lower-value equipment, as well as the growing role of Chinese suppliers in global data centre growth despite heightened U.S.-Sino tensions.
HUGE MARKET GROWTH EXPECTED
The global market for AI server liquid cooling systems is projected to surge to more than $17 billion in 2026 from $8.9 billion last year, driven by demand from Nvidia NVDA.O and cloud providers deploying custom AI chips, according to a JPMorgan report.
Envicool, founded in 2005 with a market value of 98 billion yuan ($14 billion), saw revenue surge 40% during the first nine months of the year.
At a recent industry event, it showcased a coolant distribution unit (CDU), a critical component of liquid cooling systems that distributes coolant to server racks, built to Google's specifications.
Envicool expects liquid cooling revenue to grow on a quarterly basis this year with a pipeline that includes potential orders from Google for its fifth-generation CDUs and other components, according to a Goldman Sachs report following an analyst call with the company this month.
The company has also said it plans to expand capacity at a new factory in Guangdong province, while continuing to build out facilities in Thailand and the United States.
The liquid cooling market is highly fragmented, with many suppliers providing different parts of such systems.
Chinese suppliers have gradually gained traction, benefiting from strong domestic demand, as the country's many data centre projects have helped them boost production volume and lower costs. Leading suppliers include Lingyi iTech 002600.SZ and Feilong Auto Components 002536.SZ as well as server manufacturers such as Lenovo 0992.HK.
In Taiwan, companies such as Foxconn 2317.TW, Auras 3324.TWO and Delta Asia 6762.TWO are major suppliers of such parts for Google in Asia.
Other Chinese parts suppliers benefiting from AI data centre growth include makers of optical transceivers like Innolight 300308.SZ and Eoptolink 300502.SZ. Chinese manufacturers also dominate the printed circuit board market, with companies like Victory Giant Technology 300476.SZ counting Nvidia and Google as clients.
($1 = 6.8831 Chinese yuan)
(Reporting by Liam Mo and Miyoung Kim; Editing by Edwina Gibbs)
((liam.mo@thomsonreuters.com;))
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