U.S. Multi Industry & Electrical Equipment Data Center Chillers (2/3): How real is Chiller Gate risk?

Research evidence excerpt

U.S. Multi Industry & Electrical Equipment Data Center Chillers (2/3): How real is Chiller Gate risk?

23 June 2026

U.S. Multi Industry & Electrical Equipment

Data Center Chillers (2/3): How real is Chiller Gate risk?

A few months ago, a statement by NVIDIA made a stir; they claimed current and newer Varun Govindaraj

+1 917 344 8543 generation chips could be cooled at 450C (instead of traditional requirements closer to

varun.govindaraj@bernsteinsg.com 300C). Aptly named “chiller gate”, the implication from this was that chillers would no

longer be needed - being replaced by dry coolers that are far cheaper and less energy Stacy A. Rasgon, Ph.D.

+1 213 559 5917 intensive to operate. This caused a stir in the share price of major chiller OEMs like Trane

stacy.rasgon@bernsteinsg.com Technologies, Carrier, and Johnson Controls. A few weeks ago, in Eaton’s earnings call,

similar statements were made about reducing the number of chiller units deployed in data

Daniel Zhu centers, reigniting the debate. We think there are two angles to evaluate this problem from.

+1 917 344 8309

daniel.zhu@bernsteinsg.com

First, there is the purely climatic angle - a problem of physics. We looked at hourly

Alrick Shaw temperature and humidity numbers for ~50 key data center markets, and then overlaid

+1 917 344 8454 that with scenarios of how the cooling ecosystem could evolve. Our broad takeaway

alrick.shaw@bernsteinsg.com from this was, based purely on climate data, you probably don’t need chillers to be the

dominant source of cooling and that they could be replaced by dry coolers. This is especially

Arpad von Nemes

+1 917 344 8461 true if you think CDU approach temperatures are going to reduce, and if NVIDIA’s 450C

arpad.vonnemes@bernsteinsg.com TCS guideline can go even higher.