AI data centre cooling technology company Phononic is holding sale talks, The Information reported on April 20, citing sources familiar with the matter.

The deal is being discussed at a value of at least $1.5 billion, and some potential buyers have offered more than $2 billion, the report said.

Phononic has been weighing options for its next steps since early this year after appointing investment bank Lazard as an adviser. Terms are still being discussed, and the company could choose to raise additional funding instead of a sale, The Information said.

If completed, the deal would more than double Phononic's valuation from $600 million in its 2022 investment round.

Phononic's core product is a semiconductor component called a thermal kit that helps prevent AI data centre chips from overheating. The thermal kit is attached directly to high-bandwidth memory chips and graphics processing units to cool chip clusters. Unlike conventional liquid-cooling that circulates water over cold plates mounted on servers, Phononic chips can operate alongside air and liquid cooling solutions.

As Nvidia chips become more powerful, cooling technology has emerged as a strategic focal point in AI. Without adequate cooling, overheating AI chips can cause hardware damage or slow data transfer speeds during training.

Moves by data centre cooling companies have also been active. Last month, industrial company Ecolab acquired data centre cooling company CoolIT Systems from private equity firm KKR for $4.75 billion. Late last year, industrial manufacturer Eaton bought Boyd's thermal management business for a price close to $10 billion.