Schneider Electric seals US$2.3 billion in U.S. data centre deals to power AI boom

A computer server was photographed in a data centre room in this undated stock image. (panumas nikhomkhai/Pexels.com)

Schneider Electric said on Wednesday it had signed new deals worth almost US$2.3 billion with two U.S. data centre operators, as surging adoption of artificial intelligence boosts infrastructure demand.

At an industry event in Las Vegas, the French industrial group announced a US$1.9 billion partnership with privately held tech firm Switch, covering power modules and cooling systems.

The second agreement, valued at US$373 million and involving uninterruptible power supplies and switchgear, was signed with Texas-based Digital Realty DLR.N.

Schneider, France’s biggest energy company by market value, has emerged as a key data centre supplier, making server racks, cooling and power equipment that form the backbone of AI infrastructure.

It is also working with chipmaker Nvidia to design cooling systems for its most powerful AI chips.

Large-scale cloud service providers, also known as hyperscalers, are racing to build AI infrastructure. Amazon, Meta, Google and Microsoft are projected to spend more than US$360 billion in 2025, according to company filings.

AI ramps up pressure on U.S. energy grid

The deal with Switch is Schneider’s largest cooling services agreement for data centers in North America to date. Schneider said the solution it is supplying should help scale AI capacity without proportionally increasing energy demand.

U.S. utilities are struggling to keep pace with Big Tech’s power-hungry AI data centers.

Analysts from Morgan Stanley have estimated that global power demand from data centers will nearly triple in the next three years, intensifying the strain on already stretched U.S. power grids.

The data center business accounts for nearly a quarter of Schneider’s total revenue. Financial analysts are expecting it to unveil targets tied to AI development during its capital markets day in London on December 11.