DXN's Hawaii deal backs the rise of modular data centres
Modular data centre is becoming default option
From Pilbara to defence, demand is booming
An Aussie company just scored a job in Hawaii, and no, it's not a surfing gig.
Last Monday DXN (ASX:DXN), a Sydney-based manufacturer of modular data centres, landed a $4.6 million contract with US satellite communications group, Globalstar.
By the end of next year, DXN will ship three prefabricated data centres to Maui.
These are high-performance, tailor-made data units designed to handle the unique demands of satellite comms in a remote, high-pressure environment.
It's a big moment for DXN.
The company beat out international contenders in a competitive bid and came out on top because it could do something not everyone can – build complex, custom-built data infrastructure fast and get it exactly right.
The reason that matters is because the world is in a data arms race.
And building traditional data centres the old-fashioned way – brick by brick – just isn't going to cut it anymore.
This is where modular comes in.
Box, ship, plug in
Modular data centres are like prefab homes for the digital world.
Instead of building from scratch on-site, everything – including the cooling, power, server racks, security systems – is constructed offsite inside a factory, then shipped as a complete unit to wherever it's needed.
The result is a fully functional data centre that can be dropped into place and switched on in a fraction of the time it takes to build a traditional facility.
Whether it's out in the Pilbara mining belt or at a satellite uplink in Maui, these things are designed to handle rough conditions.
In the case of DXN's Hawaii deal, that means building three state-of-the-art modules that can support satellite communications.
The fact that Globalstar, a US telco with a fleet of LEO (Low Earth Orbit) satellites, picked DXN says a lot about where this Aussie company is headed.
But it also says something bigger about where the industry is going.
Right now, demand for data is exploding.
Think AI, cloud computing, self-driving cars, remote operations. All of that needs massive processing power, and it needs it close to where the data is being generated.
That means no more waiting two years to build a shiny new data centre in a CBD. We're talking weeks, not months. Remote, not centralised. Flexible, not fixed.
That's the problem modular data centres solve. They get built fast, cost less, and scale easily. If you need more computing power, just add another unit.
They also make financial sense. Traditional data centres cost between $10 and $25 million per megawatt of IT capacity. Modular designs can cut that to around $5 million.
That's a big saving, especially when you're trying to scale up quickly in ten different locations at once.
Gaining fast traction
The Australian Department of Defence recognised these advantages back in 2020 when it awarded a $20 million contract to Canberra-based company Datapod to provide portable, containerised data systems.
These systems could be rapidly deployed by sea, air or road, ensuring the department had the agility to respond to evolving threats.
In regional Australia, where mining and energy drive the economy, modular centres are quickly becoming the default option.
In 2024, the remote town of Newman in WA's Pilbara region received a modular unit, called NE1 Newman, from NEXTDC to support edge computing for nearby mine sites. There's no way a traditional build would've made it there in time or on budget.
Big tech firms like Google, Microsoft and Tencent are also investing heavily in modular builds.
And private investors, too, are taking notice. Data centres are now seen as some of the best-performing assets in the property market, outpacing even industrial warehouses.
ASX stocks in this space
DXN can lay claim to being the only pure-play modular data centre stock on the ASX.
But other players are also in the game, just playing different versions of it.
NextDC (ASX:NXT) runs the big, purpose-built data centres in major cities.
Then there's Macquarie Telecom Group (ASX:MAQ), which offers enterprise-grade data centres.
Global Data Centre Group (ASX:GDC) is more of an investor; it holds a portfolio of data centre assets around the world.
In the big end of town, Megaport (ASX:MP1) is a heavyweight in cloud connectivity, offering networking software that links over 950 data centres worldwide.
Dicker Data (ASX:DDR), on the other hand, is Australia's leading IT distributor, supplying cloud solutions from top-tier vendors to over 8200 reseller partners across ANZ.
In the REITs space, DigiCo Infrastructure REIT (ASX:DGT) owns and manages digital infrastructure real estate, including towers, fibre, and data centre buildings.
Companies like Adisyn (ASX:AI1), meanwhile, are playing in an adjacent but related space – developing graphene-powered tech to help cool the next generation of data-hungry chips.
At Stockhead we tell it like it is. While Adisyn is a Stockhead advertiser, it did not sponsor this article.
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