Compared with the conventional industrial product–service system, the smart industrial service ecosystem (SISE) mentioned in this study contains more service activity according to the characteristics of the industrial context, participation of various stakeholders and smart interconnected technologies. This study proposes a detailed modularization design framework for SISE, which can be referenced in various industrial contexts. Firstly, the context-based smart industrial service identification blueprint (SISIB) is proposed to describe the operation model of SISE and identify the service components. The SISIB can ensure that the designers understand the service and work process of the system and improve or carry out the smart industrial service (SIS) component identification. In the case of this article, SIS components from different industrial levels can be systematically identified. Secondly, smart collaboration and sustainable development principles are proposed for measuring the correlation degree among the service components. Considering the complexity and multi-level distribution nature of service components, the hyperedge concept is presented to realize the correlation comparison among the service components, and the evaluation linguistics is applied to handle the decision uncertainties. With this method, the effective correlation comparison between service components can be formed with few hyperedges. Thirdly, the hypergraph clustering theory is applied to define the SISE service module partition. The triangular fuzzy number is first used in hyperedge strength evaluation to comply with the vague linguistics from service design experts. The normalized hypergraph cut principle is realized using the K nearest neighbors (kNN) algorithm, and with this method, the new unified hypergraph and related Laplace matrix can be obtained. Then, the relevant eigenvalue of that Laplace matrix is gained, and the component clustering visualization is realized using the k-means algorithm. After the clustering is performed, several modular design schemes can be gained. In order to select the best modularization scheme, we referenced the modularity concept and realized the quality measurement for the modular design using hypergraph modularity criteria. Regarding these three steps, a detailed modularization case study for a renewable electricity service ecosystem design is presented to verify the viability and feasibility of the study in service modular design. The result showed that the framework in this study can realize the visible and clearance service component identification in a smart connected multi-level industrial context. The modular design scheme based on hypergraph can also achieve high modularity with a more convenient correlation evaluation.