Immersion Cooling Market

Immersion Cooling Market Outlook 2026 to 2033

The global market of immersion cooling is estimated to be valued at USD 931.4 million in 2026 and is projected to reach around USD 4,917.0 million growing at a CAGR of 27.1%, over the forecast period. The growth is underpinned by operational challenges to manage heat flux densities due to the widespread deployment of generative AI and large language model training clusters. Further owing to escalating electricity costs, water usage restrictions and regulatory pressure to reduce carbon footprints are fueling the demand for immersion cooling. Conventional air cooling and even advanced liquid-to-chip systems are hitting performance and efficiency ceilings creating white space for immersion-based architectures.

North America currently dominates due to early adoption by hyperscaler and substantial AI infrastructure buildouts, while Asia-Pacific is the fastest-growing region, led by China, Singapore, South Korea and others. Immersion cooling is positioned as a cooling alternative and is framed as an enabler of next-generation compute economics for AI training clusters, crypto-mining recovery and edge data centres.

Tier 1 hyperscaler (Google, Microsoft, AWS) are retrofitting existing sites with direct-to-chip liquid cooling but designing greenfield sites specifically for immersion tanks to handle future chip generations that may exceed 1000W per package. Immersion cooling reduces electricity cost and cut capital expenditure by eliminating complex air handling infrastructure. The market is moving beyond “sustainability as a goal” to “efficiency as a survival mechanism” for operating dense silicon at profitable margins.

Immersion Cooling Market Scenario & Strategic Insights

The immersion cooling market is in inflection point similar to where hyperscale cloud was in 2010, technically validated but operationally underpenetrated. However, in past 2 years, large-scale projects turned into commercial deployments, insurance underwriting frameworks and OEM warranties support immersion-compatible hardware.

Change in industrial policy in the U.S. and Europe has placed domestic AI infrastructure and energy efficiency at the center of national competitiveness. Recent U.S. executive orders aimed at strengthening AI leadership and grid resilience have accelerated interest in high-efficiency cooling systems. This has been done by deregulating energy production and fast-tracking data center permits on federal lands. Reducing regulatory friction for building facilities incentivizes the deployment of massive GW-scale data center. Similarly, energy price volatility triggered by geopolitical tensions has reframed cooling efficiency from a sustainability discussion into cost optimization imperative. Immersion cooling is evaluated on total cost of ownership, lifecycle extension of hardware as well as the ability to unlock higher compute density per square foot.

Attribute	2026	2033	CAGR (2026 – 2033)
Market Size	USD 931.4 Million	USD 4,917.0 Million	27.1%

Key Market Trends

1. Adoption in AI and High-Density Compute Clusters

AI training workloads are altering data center thermodynamics, GPU clusters running at sustained utilization levels generate heat that air cooling cannot manage beyond certain thresholds. Immersion cooling enables uniform thermal management across components, reducing hotspots and enabling higher sustained performance. Key AI infrastructure operators are designing new facilities with immersion as a baseline option.

Moreover, operators are adopting a hybrid approach where air, direct-to-chip, and immersion cooling coexist within the same facility. For instance, legacy workloads remain on air, while high-density AI clusters are submerged. In late 2024 and 2025, colocation giants like Equinix began offering Liquid-Ready zones specifically designed to accommodate immersion tanks from partners like Submer and GRC without overhauling the entire building’s MEP (mechanical, electrical, plumbing) systems.

• Shift from Single-Phase to Two-Phase Immersion Cooling

While single-phase immersion remains dominant due to simplicity and lower operational risk, two-phase systems are gaining attention for their superior heat transfer efficiency. Single-phase is a cost-effective solution, two-phase immersion (where the fluid boils to remove heat) is seeing renewed research and innovation investment for extreme density applications (>200kW/rack). LiquidStack have demonstrated deployments in 2024 showing that two-phase systems are essential for the next generation of silicon photonics and 3D-stacked chips, despite higher initial costs and fluid complexity. Furthermore, advancements in dielectric fluids with lower boiling points and improved containment systems have addressed earlier reliability concerns. Several vendors are announcing commercial-scale two-phase deployments especially for HPC and national research labs.

• Partnerships Between Tank Vendors and Chipmakers

Immersion cooling adoption was hindered by hardware warranty concerns. The market is witnessing formal certifications where chipmakers warranty their hardware only if used with specific immersion fluids and tanks. Leading server providers are offering immersion-ready configurations, and partnerships between cooling solution providers and hardware manufacturers have matured. This ecosystem alignment reduces perceived risk and accelerates procurement cycles. For instance, Intel and Submer have deepened collaborations to produce reference designs for immersion-born server boards that lack fans and heat spreaders entirely, optimizing the hardware specifically for liquid environments rather than just submerging standard air-cooled servers.

• Fluid Innovation, Sustainability and Expansion Beyond Hyperscale into Edge and Modular Data Centers

The market is also seeing biodegradable, synthetic hydrocarbon fluids to replace older fluorochemistries that face regulatory scrutiny (PFAS restrictions in the EU). Castrol and Shell have entered the market in 2024-2025 with key focus, launching specialized dielectric fluids co-developed with OEMs to bolster the performance material compatibility and longevity, which results in immersion moving from experimental to industrial usage.

Immersion cooling is being deployed in edge environments, where space constraints and limited access to chilled water make traditional cooling difficult. Modular immersion-cooled containers are being piloted for telecom edge sites, defense installations and industrial IoT hubs. This expands the addressable market beyond large centralized data centres.

Segment & Category Analysis in Immersion Cooling Market

The market has been categorised based on cooling type, cooling liquid, deployment model, application, end user, and region

By Cooling Type

• Single-Phase Immersion Cooling
• Two-Phase Immersion Cooling

Single-phase immersion cooling currently dominates the market with more than 70% of the market share. The market dominance is owing to the majority of installed systems as its operational simplicity, lower fluid cost as well as ease of maintenance. Using a pump to circulate warm fluid to a heat exchanger and lower maintenance cost make it suitable for enterprise and colocation retrofits. It is efficient for racks up to 100kW. This cooling type is favored by enterprises transitioning from air cooling for the first time.

However, two-phase immersion cooling is the fastest-growing segment, driven by hyperscale and HPC users prioritizing thermal efficiency and rack density. This system is gaining traction in more than 150kW rack density. It is critical for ultra-high-performance AI training clusters where heat flux at the chip level is too intense for single-phase convection. However, high fluid costs and leakages are key hurdles.

By Cooling Liquid

• Dielectric Fluids
  • Fluorinated Fluids
  • Synthetic Hydrocarbon Dielectrics
• Mineral Oils
• Water Glycol Fluids
• Custom Proprietary Coolants
• Phase-Change Working Fluids

Dielectric Fluids accounts for 68% of the market share because they enable single-phase immersion where servers operate fully submerged without risk of electrical shorting, this direct contact cooling delivers thermal performance that air or indirect liquid cooling can not match at rack densities above 50-60 kW. Cryptocurrency miners opt for cheaper dielectric formulations with shorter replacement cycles, while enterprise AI training facilities specify premium fluids with 10+ year service lives because downtime for fluid changes carries massive opportunity cost.

Mineral oils are cost-sensitive deployments and retrofits of existing infrastructure. These systems cost 40-60% less than engineered dielectrics per litre and for operators running older compute hardware or applications with lower density requirements. Custom proprietary coolants represent strategic segment where fluid manufacturers bundle chemistry with system design and ongoing service contracts effectively locking customers into their ecosystems delivering optimized performance.

By Deployment Model

• On-Premise Deployment
• Colocation Hosted Deployment
• Hyperscaler Owned Deployment
• Edge Site Deployment
• Modular Containerized Deployment

On-premises deployments dominate in the global market especially in hyperscale and enterprise-owned data centres where long-term infrastructure planning is required to get return on the investment. Colocation and hosted immersion solutions are emerging as a high-growth segment in the recent time and is anticipated to remain the fastest growing segment over the forecast period. This is owing to colocation providers are increasingly offering immersion-cooled racks as premium services enabling customers to access high-density compute without owning the cooling infrastructure.

By Application

• High Performance Computing (HPC)
• AI / ML Workloads
• Cryptocurrency Mining
• General Purpose Compute
• Storage-Dense Workloads
• Edge Compute Applications
• Telecom / 5G Core Compute

AI/ML training segment is witnessing the highest demand for the immersion cooling owing to predominant rise of the sector in past 3 years. Thermal profile of GPUs running training workloads is a key reason adoption is spiking. Demand for immersion cooling for cryptocurrency mining which was the initial adopter is witnessing a steady growth and is in the middle of the product life cycle. However, it remains a key testing ground for overclocking hardware in immersion baths. Immersion is emerging as a key enabler for edge computing data centres in harsh environments (e.g., cell towers, manufacturing floors) as the sealed tanks protect IT gears from dust, humidity, vibrations and others. Other emerging applications include scientific research, financial modelling, and real-time simulation.

By End User

• Hyperscale Cloud Providers
• Colocation Providers
• Enterprise IT Organizations
• Research Institutions and Universities
• Financial Services and Trading Firms
• Telecom Operators
• Government and Defense
• Cryptocurrency Mining Firms
• Others

Hyperscale cloud providers are the largest and key strategic segment, deploying immersion for AI training clusters and high-performance computing workloads where rack densities of 80-150 kW make traditional cooling unviable. These operators make decisions based on total cost of ownership models that extend 7 to 10 years favouring higher upfront investment in immersion infrastructure and enables denser server placement that reduces facility square footage requirements.

Colocation providers represent an emerging opportunity where the business model is creating new white spaces for the market players to cater on. These operators need to offer immersion cooling as a premium service to win high-density customer workloads, however, they are reluctant to lock into proprietary fluid ecosystems that limits flexibility.

Key Regional Analysis

Region	Market Share (2025)	Key Market Highlight
North America	46%	Early adoption by hyperscaler, robust AI investment and favorable capital flow
Europe	18%	Rising energy costs and stringent carbon reduction benefiting the market growth
Asia-Pacific	30%	Demand fueled by rapid digitalization, aggressive AI ambitions and land constraints in urban hubs like Singapore and Tokyo
Rest of the World	6%	With rise in investment in the AI sector by the GCC countries, demand for immersion cooling is also seeing new markets

North America accounts for the largest market share driven by the concentration of hyperscaler (Meta, Google, Microsoft) and chip designers (NVIDIA, AMD, Intel). The region is characterized by early adoption of experimental tech. The U.S. Department of Energy’s focus on Exascale computing effectively subsidized the R&D for immersion technologies that are now transitioning to the commercial sector.

Asia-Pacific is the fastest growing region across the global market and is projected to eclipse other markets in volume in the coming years. Countries like India and China are leapfrogging air-cooling infrastructure, in 2025, major announcements being witnessed in India like partnerships involving Submer and local state governments to build GW-scale AI-ready data centres.

Rising energy costs and carbon reduction mandates make immersion cooling economically compelling. Nordic countries are leveraging immersion cooling alongside renewable energy to position themselves as sustainable data center hubs.

Market Growth Drivers and Opportunities

• Demand for compute density and power wall of AI silicone

Relentless increase in compute density is enhancing the demand. AI accelerators and next-gen processors are pushing thermal limits for air cooling. Immersion cooling directly addresses this constraint, enabling higher performance without substantial energy costs. Several operators are focusing immersion cooling as structurally necessary.

Thermal design power of next-gen chips are further boosting the demand. As GPUs push past 1000W, air cooling requires fans to spin at speeds that consume 20-30% of the server’s power budget. Immersion cooling eliminates these fans reducing server power consumption by 15-20%.

• Retrofitting existing data centres are creating new opportunities

A significant opportunity lies in retrofitting brownfield data centers. As power densities rise, operators either have to build new facilities or upgrade the existing cooling infrastructure. Immersion cooling is a compelling retrofit pathway extending asset life and deferring massive capital expenditure investments. Key operators are now retrofitting older and inefficient data centers (brownfield sites) that are power-constrained. Instead of building new facilities, operators are deploying modular immersion tanks in existing warehouses or in the older data halls. This benefits them to deploy high-density AI racks in buildings that were never designed for them effectively revitalizing the old assets.

Growth Restraining Factors and Challenges

• Operational Familiarity and Perceived Risk

Despite technical validation, immersion cooling is witnessing a key growth hurdle since several operators are unfamiliar with the technology operation procedures and many players are unwilling to adopt as habit change becomes challenge. Concerns are around maintenance practices, fluid handling, staff training persist especially among conservative enterprise operators. Data center technicians have spent 30 years working in loud, windy, cold aisles. Moving to a silent environment where swapping a drive involves a robotic arm or dipping hands into oil requires a complete re-skilling of the workforce. This is an operational objection slowing down pilot-to-production scaling.

• Fluid Sustainability and Supply Chain Challenges

Long-term sustainability and sourcing of dielectric fluids is a key strategic challenge. As adoption scales, scrutiny around environmental impact and supply chain resilience intensifies. Vendors are failing to address this and may face regulatory or reputational risks.

Further, major players like Dell and HPE offer liquid-cooled servers, standard warranty terms for immersing off-the-shelf where hardware are often voided. This forces customers to buy specialized (more expensive) SKUs or rely on third-party integrators, adding friction to the procurement process.

Competitive Outlook 

The competitive landscape is transforming as the market is in the development phase with a mix of specialized immersion cooling vendors, fluid manufacturers and infrastructure integrators. The market is witnessing increased in M&A activity, partnerships and collaborations, and pilot-to-scale transitions. Vendors are shifting from selling components to offering end-to-end immersion systems, including monitoring software, service contracts and others. Collaborations between cooling solution providers and GPU manufacturers have accelerated, signalling deeper integration across the value chain.

• Submer is a key player know for technology and highly aesthetic data-center-friendly designs. They have secured significant funding and partnerships with Intel.
• Green Revolution Cooling have strong patent portfolio and focuses heavily on cost-effective open-standard implementations having strong ties to Dell and Supermicro.
• LiquidStack is a key player in the two-phase immersion, separated from crypto-mining Bitfury targets the extreme high-end of the density spectrum.

Some of the key players are

• Submer
• Asperitas
• LiquidStack Holdings
• Green Revolution Cooling Inc.
• Iceotope
• Venttech Refrigeration Equipment Co. Ltd.
• Asetek Inc. A/S
• Schneider Electric
• Vertiv Group Corp.
• STULZ GMBH
• UNICOM Engineering, Inc.
• Fujitsu
• Delta Power Solutions
• 3M
• Cloud&Heat Technologies
• Bitfury Group Limited
• Liquidcool Solutions Inc.
• DUG Technology
• DCX Liquid Cooling Systems
• Wiwynn Corporation
• Boyd
• Hypertec Group

Key Developments:

• In February 2025, Schneider Electric completed its acquisition of Motivair Corporation (liquid cooling specialist).
• In July 2025, Submer Technologies SL signed MoU with the Government of Madhya Pradesh to develop 1GW of AI-ready data center capacity, marking one of the key single public commitments to immersion tech.
• In November 2025, LiquidStack & Innovo collaborated to deliver modular, prefabricated data center blocks equipped with two-phase cooling targeting rapid deployment in the Middle East.

Frequently Asked Questions (FAQs) 

1. How is immersion cooling market performing at global level?

Immersion cooling involves submerging IT hardware in a dielectric fluid to efficiently dissipate heat. It is critical for managing high-density compute workloads that traditional cooling cannot handle cost-effectively. The demand is estimated to worth around USD 722.0 million in 2025 and is projected to reach around USD 4,917.0 million by 2033 growing at 27.1% annualised growth rates in between the same period.

2. Can immersion cooling replace air cooling?

It will likely capture the high-performance segment (AI, HPC) in the coming years. Standard workloads (web hosting, basic storage) will remain air-cooled for the foreseeable future due to the low cost of existing infrastructure.

3. Is the fluid used in immersion cooling expensive?

The initial fill cost is high (often thousands of dollars per tank), but the fluid is designed to last more than 15 years. When amortized over the life of the data center, the cost is low compared to the utility cost it is saving.

4. Does immersion cooling damage hard drives?

Standard helium-filled hard drives are sealed and can be immersed, but traditional spinning disks usually cannot. The industry is moving toward All-Flash (SSD) storage for immersion environments or keeping storage in separate air-cooled racks. Modern dielectric fluids are non-conductive and specifically engineered for IT environments. OEM supports are reducing warranty concerns.

5. Can operator retrofit existing data center with immersion tanks?

Yes, this is a primary use case. Immersion tanks require only power and a warm water loop (to carry heat away). They do not require the complex chillers and raised floors of traditional air cooling, making them ideal for adding density to older buildings.

Take Action Now!

Contact us today to access the full report and propel your business forward with comprehensive insights and strategic opportunities.

Click here to connect with us on WhatsApp