LG Electronics has secured a major long-term contract to supply cooling solutions for AI data centers (AIDCs) totaling 5 gigawatts (GW) in North America. The win follows the company's decision to build its first U.S. chiller plant, and it is expected to speed up LG's push into the North American AIDC cooling market.
LG Electronics USA signed a long-term agreement (LTA) on Monday with Air Control Concept (AIR), a North American infrastructure platform company, for chillers to be used in AI data centers. Under the deal, LG will supply high-efficiency chillers and other cooling solutions in phases for AIDCs with a combined capacity of 5 GW. According to research firm Omdia, global data center power capacity is expected to rise by 108 GW, from 226 GW this year to 334 GW next year. LG said the contract equals roughly 5% of that increase.
AIR is an infrastructure platform company that handles AIDC design and construction, public procurement and aftermarket services across the United States, Canada and elsewhere in North America. It carries out large projects through AMC, its data center specialist subsidiary.
The LTA gives LG a stable supply base in the North American AIDC market. In particular, the company can now secure orders without having to win a fiercely competitive bid every time. The deal is also seen as proof that LG meets the demanding technical and reliability standards of the North American market, and it should improve the company's revenue visibility.
The two companies are also discussing a wider range of products. As high-performance GPUs spread quickly, power density and heat output in AI data centers keep rising, which has made liquid cooling the industry's central topic. LG and AIR are therefore in talks about supplying additional equipment, including coolant distribution units (CDUs), a key component of liquid cooling systems. LG is expanding its “Chip to Chiller” cooling business, which spans chillers, CDUs and cold plates.
LG's AIDC cooling business is growing quickly. Its orders in the first half of this year topped 600 billion KRW, and the company expects cumulative orders to reach several trillion KRW by the end of the year. LG had set a goal of 1 trillion KRW in chiller revenue by the end of next year, and it is likely to hit that target earlier.
“Building on our differentiated technology, including high-efficiency chillers and high-performance liquid cooling solutions, and our fast-growing track record supplying large-scale data centers, we will lead the global AIDC cooling market,” said Lee Jae-sung, president of LG Electronics' ES Company.
LG did not disclose the value of the contract, but industry observers believe the long-term agreement could represent a business opportunity of at least 1 trillion KRW, and potentially several trillion KRW. The actual supply value could vary depending on the data center build environment, the cooling method and whether LG also supplies equipment beyond chillers.
Brokerages had also been expecting big AIDC cooling wins for LG. In August, Kyobo Securities said the AIDC business would be “a key driver of LG Electronics' earnings growth, faster than robotics,” and forecast about 2.5 trillion KRW in additional AIDC-related orders around October.
