The modular data center market, estimated to be valued at USD 28.94 billion in 2025, is witnessing significant growth. Projections indicate a USD 138.76 billion valuation by 2032, exhibiting a CAGR of 25.1% during the forecast period. The growth of the modular data center market is being driven by several key factors. These include the rising demand for scalable, flexible, and cost-effective data storage solutions, the widespread adoption of cloud computing, and organizations' push to modernize their IT infrastructure.
Key Takeaways
Emerging technologies like edge computing, artificial intelligence (AI), and automation are expected to fuel further the market expansion. These technologies offer businesses more efficient ways to store and manage data, helping them keep pace with the increasing demands from the digital world.
- In terms of the component segment, the functional modules sub-segment is expected to drive the growth of the modular data center market in 2025, capturing over 31.5% of the market share. This growth is primarily driven by the increasing demand for flexible, scalable solutions, the need for rapid deployment, cost efficiency, and the rising adoption of cloud and edge computing technologies.
- Based on data center size segment, the large data center sub-segment is expected to have the largest share in the market. Large data centers are in high demand due to their capacity to handle growing data storage needs, support for cloud services, and ability to scale efficiently.
- Based on the tier type segment, the tier 3 sub-segment is expected to have the largest share in the market. Tier 3 data centers are highly sought after due to their robust infrastructure, redundancy, and ability to support critical applications, making them the preferred choice for businesses with growing digital and data needs.
- Based on industry, the IT & Telecom segment is anticipated to hold the largest share in the modular data center market, accounting for a significant portion of the total market. This is driven by the industry's high data processing needs, rapid digital transformation, and the ongoing expansion of 5G and cloud infrastructure.
- Regionally, the modular data center market in North America is expected to maintain a dominant position during the forecast period, accounting for over 38.5% of the global market in 2024. The ongoing shift to cloud computing, the increase in need for easily customizable and energy efficient solutions, and the increasing dependency on edge computing for real-time processing is driving the aforementioned dominance.
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Modular Data Center Market Report
Coverage
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Report Coverage
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Details
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Market Revenue in 2023
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USD 28.94 billion
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Estimated Value by 2032
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USD 138.76 billion
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Growth Rate
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Poised to exhibit a CAGR of 25.1%
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Historical Data
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2020–2024
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Forecast Period
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2025–2032
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Forecast Units
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Value (USD Billion)
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Report Coverage
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Revenue Forecast, Competitive Landscape, Growth Factors, and Trends
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Segments Covered
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By Component, By Data Center Size, By Tier Type, and By Industry
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Geographies Covered
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North America (U.S. and Canada), Latin America (Brazil, Argentina, Mexico, and Rest of Latin America), Europe (Italy, Spain, U.K., Germany, France, Russia, and Rest of Europe), Asia Pacific (China, India, Japan, Australia, South Korea, ASEAN and Rest of Asia Pacific), Middle East (GCC Countries, Israel and Rest of Middle East), and Africa (South Africa, North Africa, and Central Africa)
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Growth Drivers
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Trends
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Restraints & Challenges
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Market Dynamics:
The modular data center market is growing significantly due to rising demand for energy-efficient and green data storage systems. With businesses focusing on sustainable practices and lowering their carbon emissions, modular data centers have become an alternative to legacy installations in a more environmentally sustainable way. Modular data centers provide better power efficiency and are being supported by renewable energy sources more than ever before.
For instance, Google, which has been a pioneer in using renewable energy in its data center operations. In 2024, the company entered into deals to buy around 4 gigawatts of clean energy capacity—its biggest annual purchase to date. Google is making progress toward a target of running completely on 24/7 carbon-free power at all of its data centers by 2030.
At the same time, the rise of hybrid and multi-cloud infrastructures is accelerating the demand for modular data centers. As organizations transition from traditional setups to more agile cloud environments, modular data centers offer seamless integration with cloud services. They enable distributed workloads, improve scalability and uptime, and enhance overall performance. This flexibility is essential for businesses striving to increase responsiveness and agility in today’s fast-paced digital landscape.
Market Trends
Focus on Energy Efficiency and Sustainability
Sustainability has emerged as the top priority for organizations across the world, and data centers are no different. Modular data centers are employed since they are energy-efficient and environmentally friendly. They are configured to maximize the use of power while reducing environmental footprint through energy-saving cooling and renewable sources of power, in line with organizations' objectives to curtail their carbon footprint.
For instance, in June 2022, Huawei built the largest green data center in the Middle East and Africa—the MORO data center in Dubai—in just 5.5 days. This modular facility is powered entirely by renewable energy from a nearby solar farm and employs prefabricated modules to minimize construction waste and water usage by 80%. The project exemplifies how modular designs can facilitate rapid deployment while adhering to sustainability standards.
Cost-Effective Infrastructure Expansion
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As companies adopt digital transformation, modular data centers are a cost-effective option for traditional infrastructure expansion. Modular data centers enable companies to reduce capital costs at the onset while providing flexibility in terms of deploying and managing IT infrastructure. Modular construction allows companies to pay only for the required infrastructure at the time, which maximizes costs of operations and minimizes overheads of maintenance.
For example, a Business Continuity Resource report published in June 2022 highlighted that implementing a two-phase immersion cooling system within a modular data center can lead to significant cost savings. Compared to traditional data centers, these setups are approximately 37% to 52% less expensive to build and require about 80% less physical space. Additionally, they reduce HVAC demands by 90%, resulting in a 50% decrease in electricity-related operating expenses.
Market Opportunities
An Increase in the Use of Hybrid and Multi-cloud Strategies:
The movement towards hybrid and multi-cloud infrastructure comes with a significant demand for an agile and flexible data infrastructure that can process and manage data on different systems. Modular data centers can meet this opportunity with tailored customizable solutions that incorporate cloud services and adjust with business needs regarding data storage and processing.
For instance, in November 2023, Vertiv introduced SmartMod Max CW, a prefabricated modular data center designed to address the growing need for rapid compute deployment. This solution supports up to 200kW of IT load and offers customization options, including module dimensions, rack sizes, and cooling capacities. Its factory-assembled design ensures faster deployment and reduced on-site preparation costs, making it ideal for hybrid and multi-cloud strategies.
Shifting Focus Towards Sustainability of IT Infrastructures
There is a general global effort to achieve sustainability goals by lowering carbon emissions by modernizing various operations and modular data centers are an alternative to traditional, less energy efficient data centers due to their advanced cooling systems and renewable energy sources. With a growing market in green IT solutions, modular data centers offer a great opportunity for business.
In November 2023, Schneider Electric, the leader in the digital transformation of energy management and automation, announced at its Capital Markets Day meeting with investors a US$ 3 billion
multi-year agreement
with Compass Datacenters. The agreement extends the companies’ existing relationship that integrates their respective supply chains to manufacture and deliver prefabricated modular data center solutions.Analyst View
“The modular data center market is poised for significant growth due to the increasing demand for scalable, flexible, and energy efficient data storage solutions,” said senior analyst Mr. Suraj Bhanudas Jagtap. “Edge computing, along with the cloud-first mentality and shift towards hybrid and multi-cloud infrastructures, takes center stage in driving this need. On the other hand, there are still barriers such as initial spending and vendor lock-in. To keep pace, organizations will need to embrace the sustainability, cost-effectiveness, and performance of modular data center solutions while reducing operational overheads. These factors will offer the needed functional maneuvering in energy spending and green infrastructure investments to overcome scoped challenges of succumbing modular data center market growth.”
Recent Developments
- In February 2025, Group Rhine, a leading provider of energy solutions, and XCircle, an Australian innovator in modular infrastructure, launched Rhine XCircle, a 50:50 joint venture focused on creating cutting-edge modular data centers and critical infrastructure. This partnership combines Group Rhine’s expertise in power distribution and smart metering with XCircle’s pioneering work in modular technologies, aiming to provide scalable, efficient, and sustainable solutions to meet the needs of the expanding digital economy.
- In June, Ballard Power Systems and Vertiv created a strategic technology partnership, combining Ballard’s hydrogen fuel cells with Vertiv’s Liebert EXL S1 UPS to provide scalable, emission-free backup power options. A demonstration of a proof-of-concept showcased environmentally friendly energy for data centers, in line with increasing power needs and sustainability objectives. The emphasis is on North America and Europe.
Competitor Insights
- Flexenclosure
- Hewlett Packard Enterprise
- Huawei
- IBM
- Eaton
- Bladeroom
- Cannon Technologies
- Rittal
- Schneider Electric
- Vertiv
- Baselayer Technology
- Cisco
- Aceco TI
- Active Power
- Datapod,
- ZTE
- Commscope Holding
- Dell
Market Segmentation
By Component:
- Functional Modules
- Services
- Infrastructure
- Power & Cooling
By Data Center Size:
- Small and Medium
- Large
- Micro
By Tier Type:
- Tier 1 & 2
- Tier 3
- Tier 4
By Industry:
- BFSI
- IT & Telecom
- Government & Defense
- Healthcare
- Retail & E-commerce
- Manufacturing
- Others
By Region:
- North America
- U.S.
- Canada
- Europe
- Germany
- U.K.
- Spain
- France
- Italy
- Russia
- Rest of Europe
- Asia Pacific
- China
- India
- Japan
- Australia
- South Korea
- ASEAN
- Rest of Asia Pacific
- Latin America
- Brazil
- Argentina
- Mexico
- Rest of Latin America
- Middle East & Africa
- GCC Countries
- Israel
- Rest of Middle East
- Africa
- South Africa
- North Africa
- Central Africa
- North America