LG Electronics (066570) will build a chiller manufacturing plant in the United States and expand its domestic production lines to meet surging demand for cooling in artificial intelligence data centers. The strategy centers on a "Chip to Chiller" solution spanning chillers, coolant distribution units (CDUs) and cold plates to accelerate its push into the global AI data center market.
LG Electronics said on the 1st that it will build the chiller plant in Windsor, Virginia, targeting operation in the first half of next year. The facility will span 32,000 square meters of floor area on a 170,000-square-meter site and will produce the air-cooled chillers primarily used in AI data centers.
A chiller is a large-scale cooling system that produces chilled water in bulk to remove heat from buildings, factories and data centers. In data centers, the chilled water it generates can be used for both air cooling and liquid cooling, making it a core piece of cooling infrastructure.
AI data center servers pack large numbers of high-performance graphics processing units (GPUs) and central processing units (CPUs), and the heat generated during massive computing workloads is climbing sharply. Demand for chillers and liquid cooling equipment is rising rapidly as a result.
LG Electronics chose Virginia as a production base to supply chillers for Big Tech data centers. The plant marks its first overseas production site in the 15 years since it entered the business in 2011. Until now, the company has served global demand through its dedicated chiller plant in Pyeongtaek, Gyeonggi Province, completed in 2017.
The need to strengthen its North American production system has grown as AI data center construction accelerates. LG Electronics is currently negotiating multiple chiller supply contracts with global Big Tech firms including Microsoft, according to sources. Additional production capacity will be required to handle future orders reliably.
Virginia, where the plant will be located, is known as "Data Center Valley" for its concentration of facilities operated by global Big Tech companies and data center operators. Local production will shorten delivery times and improve supply stability while expanding points of contact with North American customers.
Global data center power capacity will rise to 420 gigawatts in 2030 from 226 gigawatts this year, according to research firm Omdia. About 60% of that is expected to be concentrated in North America. LG Electronics decided to build out local production capacity ahead of demand, viewing North America as the biggest battleground for the AI data center cooling business.
The company is also raising domestic capacity. It will add air-cooled chiller production lines at its Pyeongtaek and Changwon plants and upgrade existing equipment. It plans to boost productivity by adopting a "flow line" method in which products move along a single conveyor from the first process to the last. By the end of this year, it will expand the flow lines at Pyeongtaek and Changwon in stages to operate multiple production lines simultaneously.
Total investment in the U.S. plant, the domestic production line expansion and equipment upgrades comes to 150 billion won (about $105 million). LG Electronics plans to continue expanding and automating its global production bases to increase chiller supply capacity.
Alongside the capacity expansion, LG Electronics is broadening the scope of its AI data center cooling business. Beyond chillers that produce chilled water in bulk, it has developed in-house solutions for CDUs, which deliver coolant inside servers, and cold plates, which absorb heat by making direct contact with high-heat semiconductors such as GPUs. That is the "Chip to Chiller" strategy, linking server chips to the entire data center cooling system.
The company is also pursuing a business that combines cooling equipment with software and power infrastructure to improve energy efficiency across entire data centers. Because AI data centers consume enormous amounts of power, reducing the energy used for cooling translates directly into lower operating costs and greater data processing capacity.
In North America, LG Electronics plans to expand chiller and CDU orders from Big Tech firms and hyperscale data center operators. In Asia, it will grow the market through a "One LG" approach that combines the capabilities of LG (003550) affiliates.
"We will continue to strengthen our stable supply capabilities in cooling solutions, the core infrastructure of AI data centers, and aggressively target surging market demand," said Lee Jae-sung, president and head of LG Electronics' Eco Solution (ES) Business Division.
