LS Electric poised to join Nvidia's supply chain via Vertiv deal

LS Electric Co., a South Korean industrial system supplier, is poised to deliver a large volume of power control equipment, including switchgears and circuit breakers, to Vertiv Co., a leading provider of liquid-cooling solutions used in Nvidia Corp.'s AI servers.

LS Electric is in the final stages of negotiating the terms of the supply agreement with the world’s largest liquid-cooling system supplier, according to sources with knowledge of the matter on Monday.

The two companies have been jointly developing liquid-cooling systems optimized for Nvidia’s AI servers after forming a strategic partnership in August last year, according to the sources.

The supply, expected to be shipped in batches over the next few years, is estimated at several hundred million dollars, reflecting the rapid growth of the liquid-cooling system market.

LS Electric’s power control equipment will be embedded in Vertiv’s air cooling systems, which are expected to be installed in Nvidia’s AI servers.

Ohio-based Vertiv became a strategic partner of Nvidia after the world’s largest AI chip developer shifted from air-based to liquid-based cooling solutions last year.

“If the deal goes through, LS Electric would become part of Nvidia’s supply chain, where strong growth is all but guaranteed,” one of the sources told The Korea Economic Daily.

“Considering Nvidia’s market dominance, the power control market for liquid-cooling systems would become a strong new growth engine for LS Electric,” he said.

Switchgears and circuit breakers play a critical role in regulating and, when necessary, cutting off current to protect the overall system of AI servers.

In AI servers, coolant circulates at a consistent rate through narrow channels laid between semiconductor chips such as graphic processing units and high-bandwidth memory (HBM).

As thermal management is key to the performance of AI servers, liquid-cooling systems offer greater energy efficiency than traditional air-based methods that rely on fans to dissipate heat.

AI data centers use 10-20% of their total power to run cooling fans. In comparison, liquid-cooling systems can reduce the figure to under 5%.

“With the current boom in AI data center construction, major tech firms are demanding shorter lead times, which only a handful of suppliers like LS Electric can reliably offer,” said the source, adding that it can offer prompt after-sales service.

LS Electric is also said to be collaborating with Vertiv to supply power control systems, targeting other Big Tech firms such as Google Inc., Microsoft Corp. and Meta Inc.

As part of the strategy, LS Electric established its Bastrop Campus, a power equipment manufacturing facility in Texas, in April.

The US plant will produce medium and low-voltage power equipment and switchgears for data centers starting this year. LS Electric plans to invest an additional $240 million in the facility by 2030.

Write to Eui-Myung Park, Jeong-Soo Hwang and Chae-Yeon Kim at uimyung@hankyung.com
 

Yeonhee Kim edited this article.