Home » Israel Data Center Cooling Market

Israel Data Center Cooling Market By Component (Solution, Services); By Cooling Technique (Room-Based Cooling, Row-Based Cooling, Rack-Based Cooling); By End User (IT & Telecom, BFSI, Healthcare, Government & Defense, Others); By Data Center Type (Large, Mid-Size, Enterprise); By Region – Growth, Share, Opportunities & Competitive Analysis, 2025 – 2035

Summary
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Executive summary:

The Israel Data Center Cooling Market size was valued at USD 46.28 million in 2020 to USD 93.36 million in 2025 and is anticipated to reach USD 320.50 million by 2035, at a CAGR of 13.08% during the forecast period.

REPORT ATTRIBUTE	DETAILS
Historical Period	2020-2023
Base Year	2024
Forecast Period	2025-2035
Israel Data Center Cooling Market Size 2025	USD 93.36 Million
Israel Data Center Cooling Market, CAGR	13.08%
Israel Data Center Cooling Market Size 2035	USD 320.50 Million

Strong adoption of advanced cooling technologies drives market growth across hyperscale and enterprise data centers. Businesses invest in AI-driven cooling, modular systems, and liquid-based solutions to reduce energy usage. Government-backed digital infrastructure programs boost facility expansion, while sustainability goals promote efficient thermal management. Investors view the market as a strategic opportunity due to its alignment with green energy standards and growing cloud infrastructure demand.

Central Israel leads the market due to dense technology clusters and hyperscale data center concentration. Northern Israel shows rapid development supported by industrial expansion and academic research infrastructure. Southern Israel emerges as a growing zone for edge and defense data centers focused on renewable integration. The regional ecosystem supports long-term growth in sustainable cooling deployment across the country.

Market Drivers

Growing Investments in Hyperscale Data Centers and Rising Energy Efficiency Mandates

Strong investments in hyperscale facilities drive the Israel Data Center Cooling Market forward. Large operators expand infrastructure to manage AI workloads and growing cloud traffic. The government’s digital economy initiatives strengthen interest in scalable cooling frameworks. Firms deploy high-performance liquid cooling and precision systems to improve uptime. Sustainability standards push greater energy efficiency and water-saving designs. Vendors adopt modular cooling units to optimize thermal control in dense rack environments. The shift toward energy-efficient designs attracts both local and international investors. It strengthens Israel’s position as a strategic digital infrastructure hub in the region.

Rapid Digitalization and Cloud Expansion Fueling Cooling Demand Across Enterprises

Digital transformation across BFSI, telecom, and IT industries accelerates the adoption of modern data centers. The rise of local cloud zones drives steady upgrades in mechanical cooling efficiency. Enterprises demand reliable systems that manage thermal loads from AI and analytics operations. Firms focus on integrating predictive monitoring to maintain performance stability. AI-based systems improve air distribution and temperature balance in real time. Businesses invest in green cooling methods that align with sustainability goals. This wave of innovation strengthens reliability and lowers operational risks. The Israel Data Center Cooling Market benefits from a rapid shift toward enterprise-wide digital infrastructure modernization.

Technological Innovations in Liquid and Immersive Cooling Strengthening Market Competitiveness

Emerging cooling technologies improve power usage effectiveness (PUE) and sustainability outcomes. Liquid and immersion cooling systems gain traction among hyperscale and edge operators. Vendors enhance product efficiency through AI-driven automation and hybrid cooling platforms. New designs minimize power loss and reduce dependency on conventional air-cooled systems. Facility owners integrate digital twins for optimized airflow management. Startups and global OEMs partner to test advanced refrigerant-free solutions. The growing focus on high-density computing drives rapid product innovation. The Israel Data Center Cooling Market advances with technology adoption that ensures both efficiency and operational resilience.

For instance, Asperitas’ immersion cooling solution, commercially deployed across European and Middle Eastern markets in 2024, enabled client data centers to achieve a sustained Power Usage Effectiveness (PUE) as low as 1.14; these performance benchmarks are confirmed in Asperitas’ public case studies and verified project data

Government Incentives and Private Sector Collaborations Driving Infrastructure Modernization

Public-private collaboration supports large-scale investments in national digital infrastructure. Incentive programs encourage low-carbon cooling systems and smart energy management. Strategic partnerships between utilities, tech firms, and equipment manufacturers promote innovation. The demand for high-availability systems expands due to national data sovereignty goals. AI-based automation platforms improve predictive maintenance across cooling assets. The growing integration of renewable energy strengthens market alignment with sustainability policies. Vendors benefit from accelerated equipment deployment across government-backed projects. The Israel Data Center Cooling Market gains strong momentum through coordinated modernization efforts.

For instance, Schneider Electric’s EcoStruxure Building Management System is widely used in smart infrastructure and data center projects to optimize energy performance. The company reports that its smart automation technologies have achieved up to 22% reductions in overall building energy use in documented sustainability case studies.

Market Trends

Rising Integration of Artificial Intelligence for Predictive Cooling and Energy Optimization

Data center operators deploy AI-driven monitoring systems to enhance cooling efficiency. Predictive analytics detect thermal hotspots and optimize airflow dynamically. Machine learning algorithms support real-time energy adjustments based on workload intensity. Cooling automation lowers power usage and extends equipment lifespan. Firms invest in smart sensors that improve environmental tracking and reliability. AI integration reduces human intervention and operational downtime. Predictive platforms enhance the sustainability profile of new facilities. The Israel Data Center Cooling Market evolves with higher automation and intelligent thermal management.

Adoption of Liquid and Immersion Cooling Solutions Across High-Performance Applications

Liquid and immersion cooling become essential for high-density computing environments. These systems support advanced workloads such as AI training and blockchain operations. Equipment manufacturers design compact and scalable units for rack-level integration. Cooling technologies reduce energy waste while maintaining stable server performance. Immersion systems also minimize noise and operational heat stress. Edge facilities implement hybrid models combining air and liquid systems for flexibility. Investors focus on efficient water and refrigerant management solutions. The Israel Data Center Cooling Market strengthens through advanced cooling deployment across emerging workloads.

Shift Toward Modular and Prefabricated Cooling Infrastructure for Faster Deployment

Demand for modular data center cooling grows due to shorter construction cycles. Prefabricated units enable faster setup and reduced installation costs. Enterprises favor scalable modules that adjust capacity with rising IT loads. Manufacturers supply containerized solutions optimized for both urban and remote sites. Prefabricated systems integrate efficient air circulation and smart controls. Rapid deployment supports disaster recovery and edge computing growth. The modular approach reduces project risk and ensures design flexibility. The Israel Data Center Cooling Market gains traction from scalable and agile cooling deployments.

Focus on Sustainability and Low-Carbon Cooling Technologies to Meet Green Targets

Environmental goals reshape design priorities across regional data centers. Operators adopt low-carbon refrigerants and renewable-powered cooling systems. Airside economization and heat reuse solutions improve overall efficiency. Vendors integrate lifecycle carbon tracking to meet ESG compliance. Green building certifications promote wider adoption of eco-friendly cooling. Energy-efficient retrofits enhance legacy data center sustainability performance. The market witnesses collaboration between equipment manufacturers and energy agencies. The Israel Data Center Cooling Market aligns with global sustainability standards through climate-conscious engineering.

Market Challenges

High Energy Consumption and Limited Renewable Integration Restraining Sustainable Growth

The Israel Data Center Cooling Market faces challenges from high power demand across cooling systems. Limited access to large-scale renewable power affects carbon reduction targets. Rising electricity costs increase operational pressure on hyperscale and colocation operators. Cooling energy inefficiency limits progress toward sustainability benchmarks. Data center clusters strain national grid capacity during peak hours. Infrastructure upgrades require substantial investment and regulatory coordination. Power dependency remains a barrier to scaling green data centers. It demands accelerated renewable integration to ensure long-term efficiency and growth stability.

Complex Infrastructure Regulations and Skills Shortage Slowing Deployment Timelines

Regulatory complexity around data infrastructure and energy compliance slows project approvals. Data center construction must align with urban zoning and environmental standards. The shortage of specialized engineers delays adoption of next-generation cooling systems. Technical training programs remain limited to a few regions, increasing project costs. Import restrictions and procurement delays affect component availability. Small and mid-scale firms struggle with technical integration and compliance costs. Implementation of precision cooling requires advanced design expertise. The Israel Data Center Cooling Market faces structural barriers that slow modernization efforts.

Market Opportunities

Expansion of Edge Data Centers and 5G Networks Creating New Cooling Demand

Edge deployments across telecom and IoT infrastructure expand cooling requirements. Localized data handling boosts demand for compact and energy-efficient cooling units. Telecom providers integrate advanced cooling for base stations and edge nodes. Liquid systems enhance performance in limited-space environments. AI-driven optimization supports continuous uptime in distributed networks. New service providers enter the market with modular product offerings. The Israel Data Center Cooling Market benefits from the combined growth of edge and 5G ecosystems.

Rising Investments in AI and Quantum Computing Driving Advanced Cooling Needs

Growth in AI research and quantum computing accelerates demand for precision cooling. High-performance processors generate dense heat loads requiring liquid-based systems. Vendors collaborate with research institutes to design next-generation thermal management solutions. Innovation funding supports new projects under national digital transformation plans. Strategic partnerships between tech firms and universities create new business opportunities. The market gains strong traction in high-density computing infrastructure upgrades. The Israel Data Center Cooling Market unlocks growth through deep-tech integration.

Market Segmentation

By Component

The Israel Data Center Cooling Market includes solution and service segments, with solutions dominating due to extensive adoption of precision air conditioning and liquid cooling technologies. Cooling solutions account for most infrastructure spending as operators prioritize energy optimization. Service providers support ongoing maintenance, system upgrades, and performance analytics. Strong demand for installation and consulting services strengthens long-term client relationships.

By Data Center Cooling Solution

Air conditioners and precision air conditioners lead the market share due to wide deployment in hyperscale and enterprise data centers. Chillers and air handling units enhance air quality and temperature consistency. Liquid cooling gains traction in AI and HPC environments. Hybrid systems combining air and liquid methods show steady expansion. Vendors develop smart controllers to improve cooling accuracy and reduce energy consumption.

By Service

Installation and deployment services dominate as firms prioritize fast commissioning and reliable setup. Support and consulting services rise due to complex integration and performance optimization needs. Maintenance services ensure long-term system reliability and uptime stability. Enterprises seek continuous service models to manage operational risks. The Israel Data Center Cooling Market benefits from robust after-sales service networks and technical support.

By Enterprise Size

Large enterprises dominate due to heavy investments in hyperscale and colocation projects. SMEs increasingly adopt modular and energy-efficient cooling systems for scalable growth. Larger firms emphasize redundancy, automation, and predictive maintenance tools. SMEs benefit from cost-effective compact cooling systems. Market growth is driven by enterprise-wide digitization and IT modernization initiatives.

By Floor Type

Raised floor systems hold a strong share due to better airflow control and cable management. Non-raised floors are used in smaller or retrofit facilities. Raised floor designs allow integration of hot and cold aisle containment for optimal efficiency. Cooling customization enhances rack performance and energy savings. The trend supports both legacy and modernized data centers across Israel.

By Containment

Raised floor with hot aisle containment dominates due to high cooling efficiency in dense environments. Cold aisle containment follows for improved air distribution in compact facilities. Some operators continue using open configurations without containment for cost efficiency. Vendors innovate flexible containment modules that fit varying layouts. The market trends toward tighter thermal segregation to improve PUE levels.

By Structure

Row-based cooling leads due to efficient temperature control near heat sources. Rack-based systems gain traction in edge and modular setups. Room-based cooling remains relevant for traditional enterprise facilities. Operators balance cost, capacity, and scalability through hybrid structure combinations. The Israel Data Center Cooling Market adapts to flexible architectures supporting multi-environment demands.

By Application

Hyperscale data centers hold a dominant share driven by large cloud operators and AI workloads. Colocation facilities follow due to rising enterprise outsourcing. Edge data centers record fast growth linked to telecom and IoT expansion. Enterprise and other small-scale facilities maintain consistent demand for efficient cooling. The mix of applications ensures diverse opportunities for technology providers.

By End-User

Telecom and IT sectors lead due to large-scale data consumption and 5G rollout. BFSI and healthcare follow with high demand for secure and compliant environments. Retail and energy sectors use data-driven operations requiring reliable cooling systems. Continuous digital transformation across industries drives long-term infrastructure investments. The Israel Data Center Cooling Market benefits from multi-sector technology adoption.

Regional Insights

Central Israel Dominating Market Share Through Strong Data Infrastructure Presence (58.3%)

Central Israel, including Tel Aviv and Herzliya, leads the Israel Data Center Cooling Market with a 58.3% share. It hosts major hyperscale facilities and innovation hubs supported by strong fiber connectivity. Global firms like Google and AWS expand cooling deployments across regional data clusters. The region’s advanced infrastructure and high energy demand attract ongoing investment. It remains the technological center driving the country’s data modernization efforts.

For instance, Google’s deployment of DeepMind AI has reduced cooling energy consumption by up to 40%, and improved overall Power Usage Effectiveness (PUE) by an average of 15% at its data centers, as publicly documented by Google and independent technical reporting.

Northern Israel Emerging as a Secondary Growth Zone with Expanding Enterprise Demand (27.5%)

Northern Israel records growing installations in industrial and government-backed facilities, capturing a 27.5% share. Cities such as Haifa attract new colocation projects due to strategic port access and research institutions. Cooling systems in this zone focus on energy efficiency and modular scalability. Infrastructure upgrades continue under public-private investment programs. The subregion strengthens resilience through decentralized network expansion and new innovation clusters.

For instance, Mellanox Technologies, based in Haifa and now part of NVIDIA, develops high-performance InfiniBand and Ethernet interconnects that power advanced AI and HPC data centers. NVIDIA’s HDR 200 Gb/s InfiniBand delivers ultra-low latency and scalable bandwidth for large-scale compute clusters, supporting efficient communication across thousands of GPUs in global deployments.

Southern Israel Developing as a Future Hub for Sustainable and Edge Data Facilities (14.2%)

Southern Israel, with cities like Beersheba, holds a 14.2% share and focuses on emerging edge and defense-related data centers. The subregion attracts projects emphasizing renewable integration and heat recovery cooling systems. Local universities and startups collaborate on R&D for efficient thermal management. Strategic positioning near energy resources supports green data center operations. It plays a critical role in expanding national digital coverage across underserved regions.

Competitive Insights:

Schneider Electric SE
Vertiv Group Corp.
STULZ GmbH
Rittal GmbH & Co. KG
Mitsubishi Electric Corporation
Johnson Controls International plc
Asetek A/S
Emerson Electric Co.

In the Israel Data Center Cooling Market, competition centres on high-tech cooling systems, sustainability credentials and service footprints. Schneider Electric and Vertiv command strong positions by combining global scale with local deployment expertise. STULZ and Rittal strengthen niche penetration through precision and rack-based cooling solutions. Mitsubishi Electric and Johnson Controls bolster their reach via HVAC heritage and integrated facility services. Asetek and Emerson accelerate innovation in liquid and immersion cooling, meeting high-density rack demands. Firms invest heavily in partnerships, local service infrastructure and energy-efficient product lines to secure long-term contracts with hyperscale and enterprise data-centre operators.

Recent Developments:

In July 2025, Vertiv Group Corp., a prominent player in data center cooling, announced a strategic partnership with Oklo, an advanced nuclear technology company. This collaboration focuses on developing advanced power and thermal management solutions for hyperscale and colocation data centers, leveraging steam and electricity from Oklo’s nuclear plants.

1. Introduction

1.1. Market Definition & Scope

1.2. Research Methodology

1.2.1. Primary Research

1.2.2. Secondary Research

1.2.3. Data Validation & Assumptions

1.3. Market Segmentation Framework

2. Executive Summary

2.1. Market Snapshot

2.2. Key Findings

2.3. Analyst Recommendations

2.4. Market Outlook (2025–2035)

3. Market Dynamics

3.1. Market Drivers

3.2. Market Restraints

3.3. Market Opportunities

3.4. Challenges & Risks

3.5. Value Chain Analysis

3.6. Porter’s Five Forces Analysis

4. ISRAEL Data Center Cooling Market – Market Sizing & Forecast

4.1. Historical Market Size (2020–2025)

4.2. Forecast Market Size (2026–2035)

4.3. Market Growth Rate Analysis

4.4. Market Outlook by Country

5. Capital Expenditure (CapEx) Analysis

5.1. CapEx Trends by Cooling Solution

5.1.1. Investment patterns across air-based, liquid-based, hybrid, and immersion cooling

5.1.2. CapEx share by cooling equipment type (CRAC/CRAH, chillers, cooling towers, economizers, etc.)

5.1.3. Country-wise CapEx trends

5.1.4. OEM vs. retrofit investment analysis

5.2. Return on Investment (ROI) & Payback Period Analysis

5.2.1. ROI by cooling technology type

5.2.2. Cost-benefit comparison: air cooling vs. liquid cooling vs. immersion cooling

5.2.3. Payback period across Tier I–IV data centers

5.2.4. Case examples of cost savings through energy-efficient cooling adoption

6. Data Center Cooling Capacity & Utilization

6.1. Installed Capacity (MW & Sq. Ft.) by Cooling Solution

6.1.1. Installed cooling capacity by solution type and Country

6.1.2. Cooling system density (kW/rack and per sq. ft.)

6.1.3. Capacity expansion trends by hyperscale vs. colocation vs. enterprise

6.2. Utilization Rates & Efficiency Metrics

6.2.1. Cooling system utilization vs. design capacity

6.2.2. Average and peak load management practices

6.2.3. Equipment lifecycle and performance benchmarks

6.3. Power Usage Effectiveness (PUE) & Energy Efficiency

6.3.1. Average PUE by data center size and cooling technology

6.3.2. Comparison of traditional vs. green cooling systems

6.3.3. Cooling system contribution to total facility energy consumption

6.4. Rack Density & Cooling Efficiency

6.4.1. Average rack density (kW/rack) trends

6.4.2. Cooling adequacy vs. rack load

6.4.3. Relationship between high-density workloads (AI, HPC) and cooling requirements

7. Data Center Cooling Market, Energy & Resource Consumption Analysis

7.1. Energy Consumption Analysis

7.1.1. Total energy consumption by cooling solution type (air-based, liquid, hybrid, immersion)

7.1.2. Energy intensity per MW of IT load

7.1.3. Energy share of cooling in total facility power (cooling load ratio)

7.1.4. Annualized Energy Efficiency Ratio (EER / SEER) by cooling system type

7.1.5. Trend in energy consumption reduction through automation, AI, and free cooling technologies

7.2. Water Consumption Analysis

7.2.1. Water Usage Effectiveness (WUE) – liters per kWh of IT load

7.2.2. Water consumption by cooling technology (evaporative cooling, adiabatic cooling, etc.)

7.2.3. Water recycling and reuse systems in data centers

7.2.4. Impact of Country-wise water scarcity regulations on cooling system choice

7.2.5. Shift from water-intensive to air-based or hybrid systems

7.3. Combined Energy–Water Efficiency Metrics

7.3.1. Energy-Water Nexus in cooling optimization

7.3.2. Correlation between PUE, WUE, and total operational cost (OpEx)

7.3.3. Case studies of zero-water or waterless cooling deployments

7.4. Benchmarking & Comparative Analysis

7.4.1. Benchmarking against ASHRAE, Uptime Institute, and DOE standards

7.4.2. Comparison of ISRAEL WUE/PUE averages by Country

7.4.3. Best practices adopted by hyperscalers (AWS, Google, Microsoft, Meta, etc.)

8. ISRAEL Data Center Cooling Market – By Component

8.1. Solution

8.2. Services

9. ISRAEL Data Center Cooling Market – By Data Center Cooling Solution

9.1. Air Conditioners

9.2. Precision Air Conditioners

9.3. Chillers

9.4. Air Handling Units

9.5. Liquid Cooling

9.6. Others

10. ISRAEL Data Center Cooling Market – By Service

10.1. Installation & Deployment

10.2. Support & Consulting

10.3. Maintenance Services

11. ISRAEL Data Center Cooling Market – By Enterprise Size

11.1. Large Enterprises

11.2. Small & Medium Enterprises (SMEs)

12. ISRAEL Data Center Cooling Market – By Floor Type

12.1. Raised Floors

12.2. Non-Raised Floors

13. ISRAEL Data Center Cooling Market – By Containment

13.1. Raised Floor with Hot Aisle Containment (HAC)

13.2. Raised Floor with Cold Aisle Containment (CAC)

13.3. Raised Floor without Containment

14. ISRAEL Data Center Cooling Market – By Structure

14.1. Rack-Based Cooling

14.2. Row-Based Cooling

14.3. Room-Based Cooling

15. ISRAEL Data Center Cooling Market – By Application

15.1. Hyperscale Data Center

15.2. Colocation Data Center

15.3. Enterprise Data Center

15.4. Edge Data Center

15.5. Other Data Centers

16. ISRAEL Data Center Cooling Market – By End-user

16.1. Telecom

16.2. IT

16.3. Retail

16.4. Healthcare

16.5. BFSI

16.6. Energy

16.7. Others

17. Sustainability & Green Data Center Cooling

17.1. Energy Efficiency Initiatives

17.1.1. Deployment of free cooling, adiabatic cooling, and economizers

17.1.2. Smart control systems for temperature and airflow optimization

17.1.3. Case studies of efficiency improvement programs

17.2. Renewable Energy Integration

17.2.1. Integration of solar, wind, or geothermal sources in cooling operations

17.2.2. Hybrid systems combining renewable energy with mechanical cooling

17.3. Carbon Footprint & Emission Analysis

17.4. GHG reduction initiatives

17.5. LEED & Green Certifications

17.5.1. Share of cooling systems installed in LEED, BREEAM, or Energy Star certified facilities

17.5.2. Compliance with ASHRAE and ISO energy efficiency standards

18. Emerging Technologies & Innovations

18.1.1. Emerging Technologies & Innovations

18.1.2. Liquid Cooling & Immersion Cooling

18.1.3. Adoption rate and technology maturity

18.1.4. Key vendors and installations by Country

18.1.5. Comparative analysis: performance, cost, and energy savings

18.2. AI & HPC Infrastructure Integration

18.2.1. Cooling demand driven by AI training clusters and HPC systems

18.2.2. Adaptation of cooling design to high heat density workloads

18.3. Quantum Computing Readiness

18.3.1. Cooling requirements for quantum processors

18.3.2. Potential cooling technologies suitable for quantum environments

18.4. Modular & Edge Data Center Cooling

18.4.1. Cooling strategies for prefabricated and modular facilities

18.4.2. Compact and adaptive cooling for edge sites

18.5. Automation, Orchestration & AIOps

18.5.1. Integration of AI-driven thermal management

18.5.2. Predictive maintenance and automated cooling optimization

19. Competitive Landscape

19.1. Market Share Analysis

19.2. Key Player Strategies

19.3. Mergers, Acquisitions & Partnerships

19.4. Product & Service Launches

20. Company Profiles

20.1. Applied Materials

20.2. Vertiv Group Corp.

20.3. Schneider Electric

20.4. Johnson Controls International plc

20.5. Carrier

20.6. Mitsubishi Electric Corporation

20.7. Danfoss

20.8. STULZ GmbH

20.9. Emerson Electric

20.10. Rittal GmbH & Co. KG

20.11. CoolIT Systems

20.12. Modine Manufacturing Company

20.13. Green Revolution Cooling

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Frequently Asked Questions:

What is the current market size for Israel Data Center Cooling Market, and what is its projected size in 2035?

The Israel Data Center Cooling Market was valued at USD 93.36 million in 2025 and is projected to reach USD 320.50 million by 2035.

At what Compound Annual Growth Rate is the Israel Data Center Cooling Market projected to grow between 2025 and 2035?

The Israel Data Center Cooling Market is projected to grow at a CAGR of 13.08 % between 2025 and 2035.

Which Israel Data Center Cooling Market segment held the largest share in 2025?

In 2025, the solutions segment under the Israel Data Center Cooling Market held the largest share, driven by widespread deployment of precision air conditioners and liquid cooling systems.

What are the primary factors fueling the growth of the Israel Data Center Cooling Market?

The Israel Data Center Cooling Market growth is fuelled by rising investments in hyperscale and edge data centres, rapid digital transformation across sectors, and innovation in liquid and immersion cooling technologies.

Who are the leading companies in the Israel Data Center Cooling Market?

Key players in the Israel Data Center Cooling Market include Schneider Electric, Vertiv Group Corp., STULZ GmbH, Rittal GmbH & Co. KG, Mitsubishi Electric Corporation, Johnson Controls International plc, Asetek A/S and Emerson Electric.

Which region commanded the largest share of the Israel Data Center Cooling Market in 2025?

Central Israel commanded the largest share of the Israel Data Center Cooling Market in 2025, capturing approximately 58.3 % of the market due to its advanced data infrastructure and high concentration of hyperscale facilities.

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