As the digital age continues to evolve, the demand for more efficient and effective data centre cooling solutions has never been greater. Traditional air cooling methods are reaching their limits, especially with the rise of AI workloads that demand higher rack densities. Enter liquid cooling technology, a game-changer that promises to revolutionize the way data centres manage heat dissipation.
Liquid cooling is not a new concept, but its importance has surged in recent years due to the increasing power requirements and heat generation in data centres. Unlike air cooling, which relies on fans to dissipate heat, liquid cooling leverages the superior thermal transfer properties of water or other fluids. This method can be up to 3,000 times more effective than air cooling, making it an ideal solution for high-density racks.
There are three primary liquid cooling technologies that are gaining traction in the industry: direct-to-chip cooling, immersion cooling and rear door heat exchangers. Each of these technologies offers unique advantages and challenges, but all share the common goal of improving cooling efficiency and reducing energy consumption.
Direct-to-chip cooling involves circulating coolant through cold plates mounted directly on high-heat components like central processing units (CPUs) and graphics processing units (GPUs). This method is highly efficient, removing 70% to 75% of heat, and is more scalable and flexible than immersion cooling. However, it does come with moderate to high initial costs and the risk of leaks.
Immersion cooling takes a different approach by fully submerging servers in a bath of coolant. Immersion is the most efficient of the three methods, removing over 95% of heat, and is particularly effective in high-temperature and high-humidity environments. However, it requires specialized servers and involves high upfront capital expenditure, maintenance costs and often the use of PFAS (man-made forever chemicals).
Rear door heat exchangers are a more straightforward solution, involving the installation of a liquid-cooled door on the rear of a server rack. As hot air exits the servers, it passes through the heat exchanger, transferring its heat to the liquid. This method is the easiest to retrofit but it is also the least efficient of the three, removing only 50% of heat.
The market for liquid cooling is growing rapidly. Valued at $2.8 billion, it is forecasted to grow at a compound annual growth rate (CAGR) of 27% through 2027. Vertiv, a leading player in the industry, predicts that liquid cooling will grow from 5% of the data centre cooling market today to approximately 20% by 2028.
This growth is driven by the increasing power requirements of data centres, which are expected to standardize at 80-120 kilowatts (kW) per rack in the next few years, up from the current average of 12 kW.
The environmental and operational benefits of liquid cooling are significant. It is not only more efficient but also quieter than air cooling, reducing noise pollution in data centres. This is particularly important for the health and well-being of data centre employees, who are often exposed to the constant hum of traditional cooling systems. Moreover, liquid cooling allows for more precise heat management, which is crucial for the reliability and longevity of data centre equipment.
However, the adoption of liquid cooling is not without its challenges. High initial costs, potential for leaks and the need for specialised equipment and maintenance are significant barriers. Given the industry is still in its early stages, many customers are highly risk-averse due to the financial repercussions and downtime associated with equipment failures.
Despite these challenges, the future of liquid cooling looks promising. It is unlikely that liquid cooling will fully replace air cooling, but it will play a complementary role, especially for high-density servers. A hybrid solution of both technologies ensures redundancy and reliability in data centre operations. If one system experiences an issue, the other can take over, preventing overheating and downtime.
In conclusion, liquid cooling technology represents a significant advancement in data centre cooling solutions. Its superior efficiency, environmental benefits and potential for market growth make it an attractive option for data centres facing increasing power requirements and heat dissipation challenges. As the industry continues to evolve, liquid cooling will undoubtedly play a crucial role in shaping the future of data centre operations.
KEY RISKS
Past performance is not a guide to future performance. The value of an investment and the income generated from it can fall as well as rise and is not guaranteed. You may get back less than you originally invested.
The issue of units/shares in Liontrust Funds may be subject to an initial charge, which will have an impact on the realisable value of the investment, particularly in the short term. Investments should always be considered as long term.
The Funds managed by the Sustainable Future Team:
Are expected to conform to our social and environmental criteria. May hold overseas investments that may carry a higher currency risk. They are valued by reference to their local currency which may move up or down when compared to the currency of a Fund. May hold Bonds. Bonds are affected by changes in interest rates and their value and the income they generate can rise or fall as a result; The creditworthiness of a bond issuer may also affect that bond's value. Bonds that produce a higher level of income usually also carry greater risk as such bond issuers may have difficulty in paying their debts. The value of a bond would be significantly affected if the issuer either refused to pay or was unable to pay. May encounter liquidity constraints from time to time. The spread between the price you buy and sell shares will reflect the less liquid nature of the underlying holdings. May invest in companies listed on the Alternative Investment Market (AIM) which is primarily for emerging or smaller companies. The rules are less demanding than those of the official List of the London Stock Exchange and therefore companies listed on AIM may carry a greater risk than a company with a full listing. May invest in smaller companies and may invest a small proportion (less than 10%) of the Fund in unlisted securities. There may be liquidity constraints in these securities from time to time, i.e. in certain circumstances, the fund may not be able to sell a position for full value or at all in the short term. This may affect performance and could cause the fund to defer or suspend redemptions of its shares. May, under certain circumstances, invest in derivatives, but it is not intended that their use will materially affect volatility. Derivatives are used to protect against currencies, credit and interest rate moves or for investment purposes. There is a risk that losses could be made on derivative positions or that the counterparties could fail to complete on transactions. The use of derivatives may create leverage or gearing resulting in potentially greater volatility or fluctuations in the net asset value of the Fund. A relatively small movement in the value of a derivative's underlying investment may have a larger impact, positive or negative, on the value of a fund than if the underlying investment was held instead. The use of derivative contracts may help us to control Fund volatility in both up and down markets by hedging against the general market. The use of derivative instruments that may result in higher cash levels. Cash may be deposited with several credit counterparties (e.g. international banks) or in short-dated bonds. A credit risk arises should one or more of these counterparties be unable to return the deposited cash. Outside of normal conditions, may hold higher levels of cash which may be deposited with several credit counterparties (e.g. international banks). A credit risk arises should one or more of these counterparties be unable to return the deposited cash. May be exposed to Counterparty Risk: any derivative contract, including FX hedging, may be at risk if the counterparty fails. Do not guarantee a level of income.
The risks detailed above are reflective of the full range of Funds managed by the Sustainable Future Team and not all of the risks listed are applicable to each individual Fund. For the risks associated with an individual Fund, please refer to its Key Investor Information Document (KIID)/PRIIP KID.
DISCLAIMER
This is a marketing communication. Before making an investment, you should read the relevant Prospectus and the Key Investor Information Document (KIID), which provide full product details including investment charges and risks. These documents can be obtained, free of charge, from www.liontrust.co.uk or direct from Liontrust. Always research your own investments. If you are not a professional investor please consult a regulated financial adviser regarding the suitability of such an investment for you and your personal circumstances.
This should not be construed as advice for investment in any product or security mentioned, an offer to buy or sell units/shares of Funds mentioned, or a solicitation to purchase securities in any company or investment product. Examples of stocks are provided for general information only to demonstrate our investment philosophy. The investment being promoted is for units in a fund, not directly in the underlying assets. It contains information and analysis that is believed to be accurate at the time of publication, but is subject to change without notice. Whilst care has been taken in compiling the content of this document, no representation or warranty, express or implied, is made by Liontrust as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified. It should not be copied, forwarded, reproduced, divulged or otherwise distributed in any form whether by way of fax, email, oral or otherwise, in whole or in part without the express and prior written consent of Liontrust.
