A Reuters exclusive report indicates that a Google procurement team traveled to China this month to discuss the purchase of liquid cooling equipment for data centers with Shenzhen-listed Envicool and other Chinese manufacturers. This move not only highlights the overall strain on the AI infrastructure supply chain but also demonstrates the increasingly important role of Chinese suppliers in the global data center supply chain despite the ongoing US-China tech war.
Liquid cooling has become a "must-have" for AI data centers, and supply shortages have forced Google to seek sources in the north.
As the power consumption of GPUs in AI servers continues to soar, traditional air cooling is no longer sufficient to handle the astonishing heat generated by high-density computing. Liquid cooling systems, which use circulating water or other liquids to remove heat from the surface or surrounding the equipment, have become standard practice in modern AI data centers.
Sources familiar with the matter revealed that Google dispatched a procurement team from its Taiwan operations to mainland China to directly address the tight supply of liquid cooling system components. During their multi-day visit, the Google team formally met with Shenzhen-based Invik and plans to discuss the matter with at least one other Chinese supplier. Neither Google nor Invik has responded to inquiries regarding this news.
The market size doubled in two years: an explosive growth from $89 billion to $170 billion.
Behind this procurement is the frenzied expansion of the global AI server liquid cooling market. According to a report by JPMorgan, driven by NVIDIA and major cloud service providers actively deploying their self-developed AI chips, the global AI server liquid cooling system market is expected to surge from $89 billion in 2025 to over $170 billion in 2026.
Invic is clearly a key beneficiary of this wave. Founded in 2005, the company now has a market capitalization of RMB 980 billion, and its revenue grew by 40% in the first nine months of this year. At a recent industry exhibition, Invic showcased its Coolant Distribution Unit (CDU) built to Google specifications, a key component in liquid cooling systems responsible for precisely distributing coolant to server racks.
According to a report released by Goldman Sachs following an analyst conference call with Invitroc this month, Invitroc expects its liquid cooling business revenue to grow quarter by quarter this year, with potential orders including Google's fifth-generation CDU and other components. To meet the upcoming demand, the company has planned to expand the capacity of its new Guangdong plant while continuing to advance the construction of its production bases in Thailand and the United States.
China's supply chain is rising across the board: from heat dissipation modules to optical modules.
Google's contact with Chinese suppliers is not simply a matter of price; it reflects the high degree of specialization in the liquid cooling supply chain and the technological strength of Chinese manufacturers. The report points out that the liquid cooling market is extremely fragmented, with many suppliers providing different components for the system. Chinese suppliers, leveraging their strong domestic market demand, have gradually established a competitive advantage in terms of production volume and cost.
Besides Invik, leading manufacturers in China's liquid cooling supply chain include Lingyi iTech, Feilong Automotive Components, and Lenovo, which also has server manufacturing capabilities. More noteworthy is the equally impressive penetration rate of Chinese manufacturers in the upstream component sector:
• Optical module:Chinese companies such as Innolight and Eoptolink have become major suppliers of optical interconnect solutions for global AI data centers.
• Printed circuit board (PCB):Chinese manufacturers dominate the PCB market, with companies like Victory Giant Technology directly listing NVIDIA and Google as customers.
At the same time, the Taiwanese supply chain continues to play an important role in Google's procurement system in Asia, with companies such as Foxconn, Auras, and Delta Asia being Google's main existing liquid cooling component suppliers.
Analysis: The Reality of "China + 1" in Supply Chains and the Compromise of Geopolitics
Google's low-key trip to China to purchase liquid cooling equipment reveals a far more complex message than a simple order.
First, this confirms that a "full-chain shortage" of AI infrastructure has become the norm. In the past, the market focused on insufficient capacity for high bandwidth memory (HBM) or advanced packaging, but now the shortage has spread down to "low-priced but high-tech" components such as cooling distribution units, quick connectors, and manifolds. When cloud giants like Google need to actively seek out and go deep into supplier headquarters to secure supplies, it is clear that the supply gap in the liquid cooling market has reached a critical point.
Secondly, geopolitical barriers have temporarily become ineffective in the "heat dissipation" arena. Although the US imposes strict export controls on advanced semiconductor equipment and AI chips, liquid cooling systems, as "infrastructure that ensures the proper functioning of chips," are not included in the control list. This allows Chinese suppliers to bypass political barriers and directly enter the core data center supply chains of Western tech giants. Invic's customized CDU for Google is a perfect illustration of "technology without borders" in the AI era.
Furthermore, the "training effect" of China's domestic market is beginning to spill over. In the past few years, in order to achieve the goals of "data integration in the east and computing in the west" and "dual carbon emissions," China has built data centers on a large scale and set strict standards for PUE (Power Usage Effectiveness). This has forced Chinese domestic liquid cooling manufacturers to complete technological iteration and cost control in a very short period of time. Today, these suppliers, who have been tested by the brutal domestic market, are exporting their mature solutions and large-scale production capabilities to the global market.
Finally, it's worth noting Invic's globalization strategy—expanding its production capacity in Guangdong while simultaneously building factories in Thailand and the United States. This "China + 1" production capacity configuration not only meets customers' requirements for supply chain resilience but also provides a buffer against potential future geopolitical conflicts.
