- Copper telecom networks may be on their way out, but the metal is still heavily used in data centers
- Data centers use copper not just for cabling and power systems but also for new liquid cooling setups
- Supply hiccups coupled with rising demand could send prices up
Copper isn’t yesterday’s news, it’s integral to the future of computing. Higher density and higher performance workloads run on systems rife with copper. That means a wave of AI-driven demand for copper is on the way, and the mining industry by and large isn’t ready.
It turns out that copper is hiding all throughout the data center. It’s in power cables, the cables connecting server racks, busbars and heat exchangers, Dell'Oro Group Research Director Alex Cordovil told Fierce. Copper is also the material of choice for the cold plates used in liquid cooling systems due to its thermal conductivity characteristics. These are the kinds of plates used to cool Nvidia’s top tier AI chips.
Though Corning is looking to replace copper cabling with fiber and aluminum can be used as a copper substitute for cold plates in a pinch, the reality is that as data centers and all of these systems continue to proliferate (Synergy Research Group has counted at least 527 new facilities in the works) copper demand will rise.
Data centers will also drive demand for copper that can be used for electrical grid infrastructure as power demands rise through the end of the decade.
All told, Bloomberg Professional Services predicted last year that global copper consumption will climb by 2 million tons by 2030, with over half of that attributed to the U.S.
Is the copper market ready?
The thing is the copper market isn’t ready for the wave coming its way. Cordovil said copper suppliers haven’t yet invested in producing more to accommodate rising demand.
“There’s always a big timing lag between supply availability and investments,” he explained. “As we don’t see a lot of movement in the market right now, it’s starting to cause a bit of worry that even if people start investing in the next year, they’re still going to need three or four years for a lot of these investments to start materializing, and there might be a kind of bottleneck in the future.”
Compounding the issue are a recent string of accidents and other setbacks at copper production locations around the globe. The combination of growing demand and supply hurdles has led Morgan Stanley to predict a significant jump supply shortages starting next year and growing through 2030.
On the bottleneck front, there’s good and bad news. The good news is that data centers will largely be insulated from any price increases that could come with a strained supply environment thanks hyperscalers’ and investors’ deep pockets.
As Peter Schmitz, from analysis and consulting firm Wood Mackenzie, put it, “When developers require copper for the expansion of data centers, it is used wi[th] little concern for the copper price.”
The downside? The data centers’ ability to go high could mean the rest of the market is stuck with pricey material and little supply.
That could be especially bad news for utilities, which are already finding themselves competing with data centers for supplies like electrical transformers and gas turbines.
This story has been updated to include Alex Cordovil's full name and title.