LG Electronics' order for an artificial intelligence (AI) data center cooling solution on a scale of 5 gigawatts (GW) is an achievement that has demonstrated its technological capability and large-scale supply capacity in North America, the world's largest market. Beyond one-off product supply, it has established a foundation for stable long-term revenue while also securing a stepping stone to expand its liquid cooling solution business.
According to electronics industry sources on the 5th, LG Electronics' order value for AI data center cooling solutions in the first half of this year surpassed 600 billion won. With cumulative orders expected to reach several trillion won by year-end, the target date for achieving 1 trillion won in chiller business revenue, originally set for the end of next year, is also expected to be brought forward.
The long-term supply agreement between LG Electronics and North American infrastructure platform company 'Air Control Concept' (Air) demonstrates that LG Electronics' cooling solutions meet the stringent technical and reliability standards of large-scale data center projects. Unlike one-off contracts involving bidding competition for each project, it has established a foundation to stably supply large volumes over the long term and secured major supply track record that will serve as a basis for future additional orders. Cooperation with Air, an infrastructure platform company in North America covering everything from AI data center design and construction to public procurement and aftermarket services, is highly likely to lead to an expanded position within the supply chain.
The fact that the contract was made at a time when cooling methods for AI data centers are rapidly changing is a key point. As high-performance graphics processing unit (GPU) installations increase and power density per server rack rises, how efficiently to handle surging heat generation has emerged as a core issue determining data center performance and stability.
Accordingly, the importance of liquid cooling, which removes server heat using liquids in addition to existing air-cooling methods, is growing. The ability to jointly optimize chillers that supply chilled water needed to remove heat from data centers and cold plate distribution units (CDUs) that transfer and manage heat generated by servers has also become important.
LG Electronics and Air are discussing plans to expand supply items to CDUs, which are core equipment for liquid cooling, on the occasion of this chiller contract. If the 5GW-scale data center chiller supply leads to additional CDU orders, it will be possible to simultaneously expand both the product range supplied and the scale of the business.
LG Electronics is expanding its business scope as a 'Chip to Chiller' total solution company covering overall heat management for data centers, from air cooling to liquid cooling. Its strategy is to provide solutions necessary for the entire process of expelling heat generated by chips to the outside of the data center, going beyond individual cooling equipment.
It is also broadening its connection with the global AI ecosystem. LG Electronics joined 'NVIDIA Partner Network (NPN),' NVIDIA's official partner program, last month. Previously, 600 kilowatt (kW) and 1 megawatt (MW)-class CDUs met NVIDIA specification approval requirements, and a 2.5 MW-class CDU also received AI Factory specification approval, being recognized as a 'DSX Ready CDU.'
According to market research firm Fortune Business Insights, the global AI data center market is projected to grow at an annual average rate of approximately 26%, expanding to a size of approximately $133.5 billion (approximately 185 trillion won) by 2034. LG Electronics has decided to build a chiller factory with a total floor area of 32,000 square meters in Windsor, Virginia, U.S., targeting production in the first half of next year. It will also newly establish air-cooled chiller production lines in Pyeongtaek and Changwon and upgrade its production equipment.
The approximately 60 years of accumulated experience in the heating, ventilation, and air conditioning (HVAC) business is also a competitive advantage. Lee Jae-seong, President and Head of LG Electronics ES Business Division, said, "Based on our differentiated technological capability and rapidly expanding large-scale data center supply experience, we will lead the global AI data center cooling market."
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