Prefab data centers are on the rise: courtesy of AI

The market for “prefab modular data centers” is doing well and faces further doubling by 2027. And AI has something to do with that.

Prefab modular (PFM) data center solutions as a concept are not new at all. Years – or rather decades ago – we already saw the first “data center-in-a-box” concepts emerge: mostly concepts with (sea) containers. The Belgian company Automation was even one of the pioneers in prefab data center solutions.

But important is the nuance that in today’s PFM solutions we are talking about standardized modules, we learn in Rugvica, Croatia. We were invited by data center manufacturer Vertiv, which gave us an update on what is happening in data centers, outlined the trends for 2024 and gave us a tour of their factory where prefab data centers are built.

Plenty of FOMO

That that particular segment of data center infrastructure is currently doing well does not surprise Vlad Galabov, analyst at research firm Omdia at all. The benefits are clear: faster deployment, cost savings, scalability, efficiency and less construction overhead.
‘But it’s safe to say that data centers are becoming more and more AI factories. That means that the necessary infrastructure must be adapted, and quickly. A quick way then is to use prefab data center modules: they are enablers for the AI factory,’ Galabov says. According to the analyst, there is a great FOMO (fear of missing out, nvdr) among cloud service providers and enterprises, ‘a great fear of missing the next proverbial iPhone moment. So they all want to take advantage of Gen AI now, and I really see a kind of new gold rush to capture the greatest value from large language models (LLMs). All of that makes me think we’re really in a five-year period now where data center capacity is going to grow tremendously. And the prefab market is an essential puzzle piece in this construction phase. Specifically for the PFM segment, we’re currently talking about a $4 billion market, but I see that growing to $7 billion by 2027.’

‘Nvidia is the only one making good money from AI’

Galabov sees that the top 10 largest data center operators currently have been deploying modular solutions for (years). But surely the fact that the prefab market has grown faster than first thought has everything to do with the rise of Gen AI since the launch of ChatGPT more than a year ago. ‘But Microsoft and OpenAI are still turning a hefty loss on ChatGPT. The only one currently making good money on Gen AI is Nvidia. But the real top-GPUs needed for training AI LLMs were only accessible to a handful of companies last year: Microsoft, Meta, Google and Amazon. Next year that will change: democratization is coming and we expect other players to start being able to buy the GPUs they need. In other words, the broader market acceptance of Gen AI will not start until next year,’ the Omdia analyst believes. ‘And that, in turn, is good news for the HPEs and Dells of this world who have had a rather poor year. Indeed, much of the general computing budgets have shifted to AI, and HPE and Dell did not have immediate answers to that,’ it sounds.

According to Galabov, the fact that the prefab model can best benefit in the growth of data centers is mainly due to the ‘perfect storm’ that adds to a number of advantages: scalability, but especially the speed of both delivery and implementation. ‘The AI race is one in time. Speed is essential if you want to win the AI race. Hence we are now seeing a shift in budgets: everyone wants new applications as quickly as possible. You simply have to have the shoes that allow you to run the fastest,’ he sums it up with an analogy.


Karsten Winther, president EMEA of Vertiv, speaks of momentum for AI but also for ‘his’ data center business. ‘Gen AI is a giant catalyst for the AI market and data centers need to power it. Don’t get me wrong, data centers would also continue to grow without AI – because there is simply a need for more and more capacity due to our increasing data use – but the demand that AI brings is completely different from what we saw in previous years,” says Winther.
‘With AI, we usually evolve from CPUs to GPUs. That’s more instructions. That brings more heat. Then cooling with just air is soon no longer sufficient. Customers then choose a mix of air and liquid cooling to get to, say, 50 kilowatts.

At the production facility in Rugvica near Zagreb in Croatia, we see how Vertiv builds prefab installations for customers all over Europe: including in Belgium. On the outside grounds, we are shown a container with bilingual – Dutch, French – inscriptions next to all the modules the data center container is equipped with. ‘Yes, this one will be heading for Belgium soon,’ our guide laughs without putting a name of the customer in question on it.
Containers with maximum dimensions sized for trailers and truck transport for all intents and purposes. But a little further on during the tour, we walk through a space that is clearly much larger than one container, “We are building this one for a French customer. These are actually four containers that are disconnected for transport,’ says the guide. Still a remarkable business, we think to ourselves: the power cables, cable ducts, welds … everything is calculated to be taken apart for transport and put back together again upon delivery.


Karsten Winther sees a number of trends for 2024 that will dominate the data center world. ‘New ways of thinking, looking for new opportunities to deal with energy,’ he says. A much-needed one, because ‘by 2030, data centers will already be responsible for 2% of all electricity consumption worldwide. Dynamic grid support just has to happen,’ says Winther. Think of supporting power grids from the data center industry and (helping) facilitate (re)use of energy. ‘A second trend is that of dual cooling that I just mentioned. But as customers no longer have the time to design this all by themselves, so there is the rise of prefabricated solutions,’ Winther concludes.

Source: DataNews


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