Japan pilots liquid cooling for AI data centers as energy costs surge

Three Japanese companies have successfully started testing liquid cooling systems for artificial intelligence (AI) servers, offering hope for an industry struggling with massive heat and water consumption challenges.

Preferred Networks (PFN), Internet Initiative Japan (IIJ), and Japan Advanced Institute of Science and Technology (JAIST) began their pilot program in July at two locations across Japan. The project aims to solve a growing problem as AI systems demand more power and cooling.

Current AI processors, such as the MN-Core 2, generate massive heat that traditional air cooling cannot handle efficiently. The new direct liquid cooling system allows eight processor boards to fit in a single server node.

The pilot runs 30 server nodes at IIJ’s Matsue Data Center Park and two nodes at JAIST’s campus. Each node houses eight MN-Core 2 boards, creating a test environment with 256 AI processors total.

Modern AI processors can generate over 700 watts of heat per chip, with NVIDIA’s latest AI systems requiring 130-140 kilowatts per server rack. Traditional air conditioning systems cannot handle these temperatures effectively.

Water usage presents another major concern. Data centers currently consume about 17.5 billion gallons annually in the United States alone. This number could double or quadruple by 2028, according to research from the Lawrence Berkeley National Laboratory.

The Japanese test uses two different cooling methods. Direct liquid cooling delivers coolant straight to computer chips through specially designed plates. Hybrid cooling combines liquid and air systems in existing data center buildings.

IIJ implemented Air-Assisted Liquid Cooling technology at its Matsue Data Center. This system can retrofit older buildings without major construction work. The setup allows rapid deployment while maintaining both cooling types.

Phase two will begin in April 2026 with actual AI workloads running on the test systems. Researchers will measure performance improvements and energy savings under real computing conditions.

Japan’s government supports the effort through its Enhanced Infrastructures for Post-5G Systems program funded by the New Energy and Industrial Technology Development Organization (NEDO). The country plans to invest $11 billion in carbon-neutral infrastructure and aims for net-zero emissions by 2050.

Other Asian countries are pursuing similar solutions. South Korea’s KDDI achieved a 94 percent reduction in cooling electricity consumption during recent liquid cooling tests. Taiwan’s Vantage Data Centers opened its first liquid-cooled facility in 2024.

Singapore, facing tropical heat challenges, sees particular promise in liquid cooling. The technology works better than air systems in hot, humid climates while using less space.

Market analysts expect liquid cooling adoption to surge from 14% in 2024 to 33% in 2025. The global market could reach $15.7 billion by 2035, growing at 16.9 percent annually.

Google and Amazon have already launched liquid-cooled data centers in Europe. Microsoft plans similar deployments across multiple regions starting in 2025.

Success could influence global adoption patterns. Japan’s engineering expertise and systematic testing approach may provide templates for other countries facing similar cooling challenges.