Google's parent company, Alphabet (GOOGL), is actively pursuing partnerships with Chinese suppliers, including Shenzhen-based Envicool, to secure critical liquid cooling equipment for its expanding AI data centers. A procurement team from Google's Taiwan operations visited China this month to meet with Envicool and other suppliers, as the global supply for these components tightens amid an AI infrastructure buildout.
The demand is being driven by next-generation AI chips, such as future NVIDIA processors projected to draw over 1,500 watts, far exceeding the 700-watt H100. Traditional air cooling is insufficient for these high-performance workloads, making advanced liquid cooling systems an operational necessity. Envicool showcased a coolant distribution unit (CDU) built to Google's specifications at a recent industry event.
Analysts from Goldman Sachs note that Envicool expects its liquid cooling revenue to grow quarterly this year, with potential Google orders for fifth-generation CDUs in the pipeline. The global AI server liquid cooling market is projected by JPMorgan to more than double, from $8.9 billion in 2025 to over $17 billion by 2026. This surge is straining supply chains beyond just chips, creating bottlenecks for ancillary hardware like cooling units.
Google's move highlights the increasing role of Chinese suppliers in the global AI hardware ecosystem. While U.S. export controls restrict advanced AI chip sales to China, much of the physical infrastructure, like cooling systems, remains outside these limits. This allows U.S. tech giants to source essential components overseas, though it introduces geopolitical and supply chain risks. Envicool, valued around $14 billion, is expanding with new factories in Guangdong, Thailand, and the United States.
Investors responded positively to the strategic supply chain discussions, with GOOGL stock edging higher on expectations that these partnerships will help Google scale its AI capabilities efficiently and mitigate operational bottlenecks.
