What Is a Modular Data Center? Who Builds It, Who Gets Paid

EXPLAINED · Mechanism · Last reviewed: 12 Nov 2026 · Next review: after Vertiv’s fourth-quarter 2026 results and first 2027 guidance (February 2027) and DXN’s half-year report

A modular data center is one whose power, cooling and computer rooms are built and tested as large modules in a factory, then shipped to the site and lifted onto a prepared slab, instead of being assembled piece by piece on site. That can roughly halve the build and moves the work, and the money, from the building site to the factory floor, but it does not bring the grid connection any closer, so power still sets the opening date.

Why an investor cares: the AI build-out is short of time more than it is short of money, and modular building is the industry’s main answer to the part of the delay it can control. When the work moves into a factory, so does the revenue, and the companies that own those factories get paid sooner and on a more predictable schedule than a building site. This page builds on what an AI data center is and how long one takes to build, and answers one question: what is a modular data center, and who gets paid when data centers are built in factories?

What is a modular data center?

It is a way of building, not a kind of computing. A modular data center does the same job as any other: it holds servers, feeds them power, takes the heat away and keeps them running. The difference is where it is made. In a conventional, or stick-built, data center, crews assemble the electrical rooms, the cooling plant, the cable trays and the pipework inside the building, in sequence. In a modular one, those pieces arrive finished, tested and ready to connect.

“Modular” covers four quite different things, and headlines rarely say which one they mean.

• Containerised units. A complete small data center in a box the size of a shipping container, or a few of them. They suit edge sites, remote locations and pilots. DXN’s first AI contract, a 1.36 MW modular data center for a US-listed neocloud, is at this scale.
• Factory-built power rooms. Switchgear, transformers and backup power equipment installed and wired inside a steel enclosure, often called an e-house, then trucked to site. This is what Fibrebond makes, and why Eaton bought it. Our page on who makes data center power equipment covers the gear that goes inside.
• Factory-built fit-out. The overhead layer above the racks, with busbar power, liquid-cooling pipework, hot-aisle containment and network trays, built as one prefabricated unit and lifted in. Vertiv’s SmartRun is the clearest example; Vertiv says it installs up to 85% faster on site than stick-built work.
• Full prefabricated buildings. The whole hall, shell included, made as blocks in a factory and assembled on a slab. Vertiv’s OneCore comes in 5 to 50 MW blocks; Brightray says more than 90% of its full-prefab facilities is built, integrated and tested in its factory.

Most big AI projects mix the four: a conventional or factory-made shell, factory-built power rooms outside it, and a prefabricated fit-out inside. The building owner, often a developer or landlord, decides how much to buy finished; our page on who builds AI data centers explains those roles.

How does a modular build work?

The trick is doing two jobs at once. In a stick-built project, most of the electrical and mechanical work can only start once the building is up. In a modular one, the factory builds the power and cooling modules while the site is graded, the foundations are poured and the utility works begin. Vertiv’s chief executive put it plainly on 28 October 2026: factory-built, modularly deployed infrastructure “happens in parallel with site preparation” and “cuts deployment time by up to half.”

• 1. Design a standard block. The same module design is reused across sites, so engineering is done once rather than for each hall.
• 2. Build and test in the factory. Modules are assembled on a production line and tested before they leave, which moves quality checks off the building site.
• 3. Ship and lift. Trucks deliver the modules and cranes set them on the slab. Vertiv says one crew can install more than 1 MW of SmartRun a day.
• 4. Connect to power. The modules are joined to the site’s substation and the grid. Our power distribution explainer walks through that path from grid to chip.
• 5. Commission and hand over. The hall is tested as a whole, then handed to the tenant, which is when rent starts.

How much faster is a modular data center?

The makers’ claims are large. Brightray, now 60% owned by Nasdaq-listed BUUU Group, says its full-prefab blocks of 15 to 50 MW take six to nine months against 18 to 36 months for a conventional build, and its factory-built interiors about 7 to 14 months. At its Sedenak Tech Park campus in Johor, it says the first 20 MW was built in eight months. Vertiv says up to half for its modular approach, and up to 85% faster on site for the SmartRun overhead layer alone.

Three things to keep in mind when reading those numbers. They are sales claims from the companies that sell modules. They measure different things: a whole block, an interior, or one layer of the fit-out. And none of them starts the clock on the day the owner asked the utility for power. BUUU’s own pitch puts the value of the time saved at about $14.2 million for each month of delay on a 60 MW facility, a figure it attributes to outside research; that is the reason buyers pay for speed, but it only counts if the power is there to use.

Our view: modular building is a real speed-up for the part of the job that happens inside the fence. For the full timeline, including the grid, see how long it takes to build an AI data center.

Who makes modular data centers?

Two groups. The large electrical and thermal equipment makers are folding modules into what they already sell, and specialist integrators, several of them in Asia, build whole facilities in factories.

DXN reports in Australian dollars. Figures are the companies’ own statements, dated April 2025 to October 2026. Full list under References.

What does a modular data center cost?

There is no list price, because scope varies so much: a power room, a fit-out and a whole building are different purchases. Two disclosed numbers give a rough range.

• BUUU Group’s pipeline. BUUU says Brightray’s pipeline is expected to reach about 2 GW, worth about $9 billion of potential contract value. That is about $4.5 million per megawatt (our arithmetic), for a mostly full-prefab scope, subject to final agreements.
• DXN’s first AI contract. About $8.8 million, in Australian dollars, for a 1.36 MW AI modular data center, signed in June 2026. That is about $6.5 million per megawatt (our arithmetic). Small units cost more per megawatt than big blocks.

Neither document lists exactly what is included, and neither figure covers the chips and servers, which are bought separately and cost far more. Our page on what an AI data center costs splits the full bill.

Who gets paid, and when?

Follow where the work goes. In a stick-built project, a large share of the money goes to the general contractor and the local trades, and it is paid in stages as the site progresses over two or three years. In a modular project, more of it goes to whoever owns the factory, and it is paid as modules are built and shipped.

• Factory owners, first and faster. DXN shows the effect at small scale. Its FY26 revenue was $10.1 million. It expects about 45% of its $40.9 million backlog to turn into revenue in the six months to December 2026, about $18.4 million, or roughly 1.8 times last year’s full revenue in half a year (our arithmetic). Factory output, not site progress, sets the pace of billing.
• Equipment makers, buying in. Eaton paid $1.4 billion for Fibrebond in April 2025, about 12.7 times its estimated 2025 adjusted EBITDA and about 3.7 times its trailing revenue (our arithmetic). Eaton’s quarterly report shows $541 million of that as goodwill and $410 million as customer relationships, which tells you it was paying for access to data center buyers. Vertiv, the biggest name in the space, grew third-quarter 2026 sales 61% to $4,313 million and says customers still place orders about 12 to 18 months ahead. See our Analysis on Vertiv’s prepaid gear line and Catalyst on Vertiv’s customer prepayments.
• Site contractors, less. Modules need slabs, cranes and connections, but fewer electricians and pipefitters on site. Vertiv markets SmartRun as reducing labour needs. In markets short of skilled trades, that is the point; for local contractors it means a smaller share of each project.
• Landlords and tenants, sooner, if the power is ready. A lease starts paying when the hall is handed over. Building faster brings that date forward only when the grid connection is already in hand. Our data center lease explainer shows how rent starts.

Where is the stuck step?

In two places, and neither is the building.

The grid. A module finished in eight months still needs a substation, a high-voltage connection and enough power from the utility. If that is two years away, the module waits, finished, for two years. Modular building shortens the part of the timeline a factory controls; it does nothing for the part a utility controls. Our Malaysia Pulse on Johor’s grid connections shows what that wait looks like in practice.

The factory slot. As more buyers go modular, the factories become the queue. Brightray says it has 300 MW a year of factory capacity and targets about 1 GW of deliveries over three fiscal years, about 333 MW a year, which is more than its stated capacity (our arithmetic). DXN raised $7.0 million to add factory capacity and is opening plants in Johor and New South Wales. Vertiv says customers order 12 to 18 months ahead. A buyer who did not reserve a slot does not get the speed.

There is also proof risk at the newer suppliers. DXN’s indicative follow-on of more than US$200 million depends on its 1.36 MW proof-of-concept module working as promised; until it is delivered and commissioned, that follow-on is a possibility, not a contract.

Our view: modular building moves the stuck step but does not remove it. It turns a construction problem into a manufacturing problem, which is easier to scale, and leaves the power problem exactly where it was. The question to ask about any modular data center headline is: is the power already there?

Modular data centers in Singapore, Malaysia and Australia

Malaysia. Johor, which BUUU, citing Cushman & Wakefield, calls Asia Pacific’s largest data center market, has also become the region’s modular factory floor. Brightray’s flagship is the 120 MW Sedenak Tech Park campus, where 70 MW runs for internet and cloud customers and 50 MW more is scheduled. DXN’s first factory outside Australia is in Johor, with production expected to start in the quarter to December 2026. TECO says Malaysia is its Southeast Asian base for modular prefabrication, backed by a busway plant in Penang and its purchases of the Malaysian firms NCL Energy and Dynaciate Engineering. See our Malaysia door and Wire on Princeton Digital’s Johor loan.

Singapore. Singapore is where the buyers and the capital sit rather than where the modules are made. BUUU is moving its headquarters there to be close to the region’s customers and capital markets, and TECO chose Data Centre World Singapore in September 2026 to show its modular range, including a 10 MW project. In Singapore itself, land and power are rationed by government allocation, so speed of building matters less than winning the allocation; see what Keppel DC REIT does, what Digital Core REIT does and our Singapore door.

Australia. DXN is the listed pure play: a modular data center maker that sold its Hobart colocation site in June 2026 for up to A$520,000 to focus on factory work, and plans a second Australian plant in New South Wales. The larger Australian operators still build mostly conventional campuses; see what NEXTDC does and our Australia door.

What would change this view?

• Faster grid connections. If utilities in Texas, Johor or Sydney cut connection times sharply, the building becomes the slow step again, and modular speed is worth much more.
• Factory capacity catching up. If Vertiv, Eaton and the integrators add capacity faster than orders grow, the factory slot stops being a queue and module prices come under pressure.
• A failed proof. A high-profile modular AI hall that runs late, overheats or needs rework on site would slow adoption, especially for the smaller suppliers.
• Chip generations outrunning the module. Each new GPU generation pushes rack power higher. A factory design that cannot take the next generation’s power and cooling loses its advantage.

How to read a modular data center claim

• Which kind of modular? A power room, a fit-out and a whole building are different products with different savings.
• Faster than what, from when? Check whether the months start at design, at groundbreaking or at the grid request.
• Is the power already contracted? Without a grid date, a modular build date means little. Our contracted power explainer shows what to look for.
• Capacity, pipeline or contract? BUUU’s 2 GW is a pipeline, DXN’s US$200 million is indicative, and a signed order is something else again.
• Which currency? DXN reports in Australian dollars; BUUU and Vertiv in US dollars.

FAQ

Related: what is an AI data center; hyperscale vs colocation data centers; data center tiers; where AI data centers are located; data center financing; what a neocloud is; the Stargate data center project.

Stack doors

Layer: AI Data Centers. Also: Hyperscalers, Neoclouds, Semiconductors. Markets: US, Malaysia, Singapore, Australia.

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References