Data Center Dielectric Fluid Market - A Global and Regional Analysis: Focus on Application, Product, and Country Analysis - Analysis and Forecast, 2023-2028

Jan 2024| BIS913A| BIS Research

Report Highlights

The Global Data Center Dielectric Fluid Market Expected to Reach $338.80 Million by 2028.

Global Data Center Dielectric Fluid Market Overview

The global data center dielectric fluid market, valued at $76.71 million in 2023, is expected to reach $338.80 million by 2028, exhibiting a robust CAGR of 34.59% during the forecast period 2023-2028. The growth in the global data center dielectric fluid market is expected to be driven by increased water scarcity and increasing construction of edges, colocation, and hyperscale data center facilities. In addition, the surge in demand for liquid cooling systems is also boosting the demand for dielectric fluids in the data center dielectric fluid market.

Introduction to Data Center Dielectric Fluid Market

In a data center, the heat generated by the IT equipment is absorbed by the dielectric fluid, which then circulates through a cooling system, where it releases the heat to the outside environment.

Data center cooling systems serve diverse industries, including IT, telecom, healthcare, BFSI, and retail, catering to various types such as hyperscale, colocation, enterprise, and edge data centers. These cooling solutions encompass air, liquid, and free cooling methodologies. Air-cooling options span air conditioners, air handling units, chillers, and cooling towers. Liquid cooling, in turn, involves direct (direct-to-chip, cold plate) and indirect (in-rack, in-row) approaches. The deployment of immersion cooling and the strategic use of data center cooling terms, such as direct and indirect cooling, characterize the analytical framework for efficient thermal management. Additionally, the implementation of free cooling, a process involving venting hot air outside and drawing pre-chilled exterior air into the facility, emerges as a noteworthy strategy, particularly applicable in colder climates for optimal data center cooling performance.

The most common dielectric fluids used in data centers are synthetic polyalphaolefins (PAOs), synthetic esters, and various fluorocarbons. The selection criteria for dielectric fluid plays a pivotal role in shaping the landscape of liquid cooling within data centers. The thermal conductivity of the chosen fluid is not merely a technical detail; it directly influences the efficiency of heat transfer, and consequently, the overall performance of liquid cooling systems.

Compatibility with a diverse range of electronic components speaks to the adaptability and versatility of the chosen fluid, allowing for flexible integration within varied data center configurations. Environmental considerations, such as opting for biodegradable or non-toxic fluids, reflect a strategic alignment with sustainability initiatives and regulatory requirements. Safety factors, encompassing non-flammability and chemical stability, are critical components of the selection process, directly impacting the security of both personnel and equipment in the operational environment.

The emphasis on long-term stability and minimal maintenance underscores the importance of reliability over time. Striking a balance between cost and performance is not merely a financial consideration but a strategic move to facilitate broader adoption by enhancing accessibility and appeal to a diverse spectrum of data center operators in the data center dielectric fluid market.

In 2022, the global data center dielectric fluid market reached a valuation of $56.99 million. Over the forecast period, the market is projected to exhibit a CAGR of 34.59%, reaching a value of $338.80 million by 2028. The expansion of data center dielectric fluid market is influenced by a multitude of significant factors. These include the escalating worldwide need for energy-efficient and robust data center cooling solutions, diminishing accessibility of water resources, increasing penetration of the internet, cloud computing, and technologies such as AI, IoT, and big data, and the regulatory landscape toward environment-friendly and low global warming potential (GWP) dielectric fluids. As a cumulative effect, these factors are projected to drive the increased adoption of dielectric coolants in data center dielectric fluid market. These eco-friendly dielectric fluids empower data center operators to optimize resources and enhance cooling systems and overall data center performance.

Market Segmentation:

Segmentation 1: by Industry

  • IT and Telecommunications
  • Banking, Financial Services, and Insurance (BFSI)
  • Government and Public Sector
  • Healthcare
  • Manufacturing
  • Retail
  • Others

During the forecast period 2023-2028, the IT and telecommunications segment is expected to dominate the data center dielectric fluid market. With the introduction of new technologies such as 5G, IoT, virtual and augmented reality, and artificial intelligence, the IT and telecommunications industry is evolving to cater to huge data processing. As a result, telecom data centers are also transforming to handle high data volume and low latency needs. The banking, financial services, and insurance (BFSI) segment is expected to anticipate the highest growth rate due to being digitized, which involves utilizing the most cutting-edge technology, which will boost the data center usage, thereby augmenting the data center dielectric fluid market.

Segmentation 2: by Data Center Type

  • Hyperscale
  • Colocation
  • Enterprise
  • Edge

Segmentation 3: by Region

  • North America - U.S., Canada, and Mexico
  • South America
  • Europe - Germany, France, Netherlands, and Rest-of Europe
  • China
  • U.K.
  • Asia-Pacific - Japan, India, Australia, Singapore, Malaysia, and Rest-of-Asia-Pacific

During the forecast period, Europe, North America, and Asia-Pacific are projected to witness substantial demand for environment-friendly dielectric fluids. The increasing government regulations and the consequent expansion of the data center industry are expected to create favorable conditions for the adoption of dielectric fluids.

The utilization of dielectric fluids is witnessing a notable expansion in Europe, North America, Asia-Pacific, and China. This growth can be attributed to heightened research and development activities, alongside experimental field studies conducted by institutions and government entities aimed at assessing the environmental and economic advantages associated with data center dielectric fluids. In the U.K. and South America, the rapid proliferation of start-up ventures, coupled with the demand for efficient fluorinated chemicals, is driving the adoption of data center dielectric fluids, consequently stimulating market growth.

Recent Developments in the Global Data Center Dielectric Fluid Market

  • In July 2023, Chemours entered the two-phase immersion cooling fluids market, introducing a product with lower global warming potential than rivals such as 3M's Novec. Currently undergoing manufacturing capability testing, the fluid is slated for a 2025 market release pending regulatory approvals. Chemours aims to position itself as a leader in sustainable data center cooling solutions, aligning with the industry's increasing focus on eco-friendly practices. This strategic move reflects the company's forward-looking approach and anticipates the rising demand for environmentally conscious immersion cooling fluids.
  • In April 2021, Microsoft announced that it has been testing a new refrigerant-free cooling technology called immersion cooling. Immersion cooling uses a dielectric fluid to cool the servers. This eliminates the need for refrigerant and can also improve the efficiency of the cooling system.

Demand – Drivers, Challenges, and Opportunities

Market Drivers: Expanding Data Center Industry

The rising demand for digital services, cloud computing, and data storage is causing an increased need for data center infrastructure on a global scale. Hyperscale data centers are being built by IT giants all over the world to offer cloud services and satisfy rising computing demands. Additionally, the growth of edge computing, which moves data centers closer to end users, makes it possible for cutting-edge technologies such as IoT and 5G to respond more quickly.

According to the India Brand Equity Foundation (IBEF), there are about 8,500 data centers in operation worldwide as of 2022. In addition, to address environmental concerns and reduce costs, the industry focuses on energy-efficient technologies, server virtualization, and renewable energy integration, aiming to curtail data center energy usage and its environmental impact. The rise in the use of dielectric fluids in data centers is instrumental in minimizing energy usage. According to the scientific journal ScienceDirect, a data center operator could reduce almost 40-50% of energy consumption by deploying dielectric fluids for cooling IT equipment. Efficient cooling systems utilizing dielectric fluids help maintain optimal operating temperatures, reducing the need for energy-intensive air conditioning. This leads to significant energy savings and improved overall data center efficiency, a crucial factor in today's energy-conscious and cost-effective data center operations.

Market Challenges: Negative Environmental Concerns about Fluorocarbons

One major challenge for the data center dielectric fluid market is the environmental impact associated with traditional fluids. For instance, some dielectric fluids may contain perfluorinated compounds, contributing to greenhouse gas emissions. According to a report by the Intergovernmental Panel on Climate Change (IPCC), perfluorocarbons, a subset of these compounds, have a global warming potential that is thousands of times higher than carbon dioxide. This environmental challenge underscores the industry's imperative to transition toward more sustainable dielectric fluid alternatives to mitigate the ecological footprint of data center operations.

Market Opportunities: Emerging Growth Potential for Edge Computing and Increasing Penetration Rate of the Internet of Things (IoT) and Cloud Services

The rapid expansion of internet services, the anticipated rise in mobile phone user numbers, and increased demand for data centers and over-the-top (OTT) platforms, such as Netflix, have the potential to significantly increase the consumption of dielectric fluids.

As the data center industry continues to evolve, stakeholders in dielectric fluid manufacturing and supply chains should acknowledge the growing demand driven by these factors. It is imperative to strategically invest in research and development to create more efficient and environment-friendly dielectric fluids.

Furthermore, manufacturers of immersion cooling fluids can collaborate with key industries such as telecommunications and data center construction to ensure a stable and innovative supply of dielectric fluids, meeting the rising demand. This strategic approach positions them favorably in this expanding market.

How Can This Report Add Value to an Organization?

Product/Innovation Strategy: The product segment helps the reader understand the different application and product segments of data center dielectric fluids and their potential globally. Moreover, the study gives the reader a detailed understanding of the different regulations, consortiums and associations, and government programs impacting the dielectric fluid manufacturers for various purposes, including data centers. Compared to conventional refrigerants, dielectric fluids enable more energy efficiency, low GWP, low ozone depletion potential (ODP), and low greenhouse gas (GHG) emissions, allowing data center operators to save money by maximizing the use of their inputs.

Growth/Marketing Strategy: The global data center dielectric fluid market has seen major development by key players operating in the market, such as business expansion, partnership, collaboration, and joint venture. The favored strategy for the companies has been partnership, collaboration, and joint venture activities to strengthen their position in the global data center dielectric fluid market.

Competitive Strategy: Key players in the global data center dielectric fluid market analyzed and profiled in the study involve dielectric fluid manufacturers, including market segments covered by distinct product kinds, applications served, and regional presence, as well as the influence of important market tactics employed. Moreover, a detailed competitive benchmarking of the players operating in the global data center dielectric fluid market has been done to help the reader understand how players stack against each other, presenting a clear market landscape. Additionally, comprehensive competitive strategies such as partnerships, agreements, and collaborations will aid the reader in understanding the untapped revenue pockets in the market.

Research Methodology

Primary Data Sources

The primary sources involve industry experts from the industrial heating, ventilation, air-conditioning (HVAC) and data center industry and various stakeholders such as data center cooling solution suppliers and developers, dielectric fluid providers, and data center operators, among others. Respondents such as CEOs, vice presidents, marketing directors, and technology and innovation directors have been interviewed to obtain and verify both qualitative and quantitative aspects of this research study.

The key data points taken from primary sources Include:

  • validation and triangulation of all the numbers and graphs
  • validation of reports segmentation and key qualitative findings
  • understanding the competitive landscape
  • validation off the numbers of various markets for market type
  • percentage split of individual markets for regional analysis

Secondary Data Sources

This research study involves the usage of extensive secondary research, directories, company websites, and annual reports. It also makes use of databases, such as ITU, Hoovers, Bloomberg, Businessweek, and Factiva, to collect useful and effective information for an extensive, technical, market-oriented, and commercial study of the global market. In addition to the aforementioned data sources, the study has been undertaken with the help of other data sources and websites, such as the Uptime Institute, Data Center Dynamics, Data Center Knowledge, and the International Energy Agency (IEA).

Secondary research was done in order to obtain crucial information about the industry’s value chain, revenue models, the market’s monetary chain, the total pool of key players, and the current and potential use cases and applications.

The key data points taken from secondary research include:

  • segmentations and percentage shares
  • data for market value
  • key industry trends of the top players of the market
  • qualitative insights into various aspects of the market, key trends, and emerging areas of innovation
  • quantitative data for mathematical and statistical calculations

Data Triangulation

This research study involves the usage of extensive secondary sources, such as certified publications, articles from recognized authors, white papers, annual reports of companies, directories, and major databases to collect useful and effective information for an extensive, technical, market-oriented, and commercial study of the global data center dielectric fluid market.

The process of market engineering involves the calculation of the market statistics, market size estimation, market forecast, market crackdown, and data triangulation (the methodology for such quantitative data processes is explained in further sections). The primary research study has been undertaken to gather information and validate the market numbers for segmentation types and industry trends of the key players in the market.

Market Estimation and Forecast

The main task for a thorough analysis of the global data center dielectric fluid market has been to identify the set of underlying factors. In this case, the following figure exhibits the detailed methodology adopted for estimating and forecasting the global data center dielectric fluid market:

Factors for Data Prediction and Modelling

The following section exhibits the standard assumptions and limitations followed throughout the research study named global data center dielectric fluid market:

  • The scope of this report has been focused on the utilization of dielectric fluid in various data center types and product types.
  • The base currency considered for the market analysis is US$. Currencies other than the US$ have been converted to the US$ for all statistical calculations, considering the average conversion rate for that particular year.
  • The currency conversion rate has been taken from the historical exchange rate of the Oanda website.
  • Nearly all the recent developments from January 2020 to June 2023 have been considered in this research study.
  • The information rendered in the report is a result of in-depth primary interviews, surveys, and secondary analysis.
  • Where relevant information was not available, proxy indicators and extrapolation were employed.
  • Any economic downturn in the future has not been taken into consideration for the market estimation and forecast.
  • Technologies currently used are expected to persist through the forecast with no major breakthroughs in technology

Key Market Players and Competition Synopsis

The companies that are profiled in the data center dielectric fluid market have been selected based on inputs gathered from primary experts and analyzing company coverage, product portfolio, application, and market penetration. The global data center dielectric fluid market is a highly competitive and emerging industry, with many players competing for market share. The data center dielectric fluid market is characterized by the presence of liquid cooling companies and start-ups. To survive competition in the fast-growing artificial intelligence (AI) and neural network-integrated data center cooling industry, liquid cooling companies that are major adopters of dielectric fluids have developed strong strategies in recent years and they are thriving in the data center dielectric fluid market. Among all the strategies, the most preferred one in data center dielectric fluid market is by key players has been product launches, partnerships, collaborations, joint ventures, and alliances with other firms.

For instance, in 2020, Engineered Fluids introduced customized products in its product line-up that can be specifically used with application-specific integrated circuit (ASIC)-based cryptocurrency mining equipment. It launched BitCool-888, which was engineered specifically for use in open single-phase liquid immersion cooling (SLIC) tank solutions and for material compatibility with ASIC-based cryptocurrency miners and similar blockchain applications.

Major players in the data center dielectric fluid market include dielectric fluid manufacturers such as FUCHS, The Lubrizol Corporation, 3M, and M&I Materials Ltd.

Some prominent names established in the data center dielectric fluid market are:

  • The Lubrizol Corporation
  • 3M
  • M&I Materials Ltd
  • Green Revolution Cooling, Inc.
  • Submer
  • Solvay
  • Engineered Fluids
  • Shell
  • Cargill, Incorporated

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