Alright, afaict what is happening is this:

In Focal I first faced this issue when upgrading kmod to 26+20191223-1ubuntu1.. but my reproducer was "update-initramfs" only. The issue is that both: mkinitramfs (initramfs-tools) needs a patch to work with recent 5.x kernels:

# mkinitramfs (initramfs-tools)

# Copy in modules.builtin and modules.order (not generated by depmod)
# and modules.builtin.bin (generated by depmod, but too late to avoid
# error messages as in #948257)
for x in modules.builtin modules.builtin.bin modules.order; do
        if [ -f "${MODULESDIR}/${x}" ]; then
                cp -p "${MODULESDIR}/${x}" "${DESTDIR}${MODULESDIR}/${x}"
        fi
done

All other Ubuntu versions that might use a HWE kernel will need a SRU of that patch.

But thats not the only way to trigger the issue as it seems...

I was able to reproduce the issue when doing:

(k)rafaeldtinoco@kmodissuefocal:~$ apt-get install linux-image-5.4.0-14-generic linux-headers-5.4.0-14-generic linux-modules-extra-5.4.0-14-generic

while I had kernel 5.4.0-18-generic installed.

Setting up linux-modules-5.4.0-14-generic (5.4.0-14.17) ...
depmod: ERROR: ../libkmod/libkmod.c:515 lookup_builtin_file() could not open builtin file '/lib/modules/5.4.0-14-generic/modules.builtin.bin'
depmod: ERROR: ../libkmod/libkmod.c:515 lookup_builtin_file() could not open builtin file '/lib/modules/5.4.0-14-generic/modules.builtin.bin'
depmod: ERROR: ../libkmod/libkmod.c:515 lookup_builtin_file() could not open builtin file '/lib/modules/5.4.0-14-generic/modules.builtin.bin'
depmod: ERROR: ../libkmod/libkmod.c:515 lookup_builtin_file() could not open builtin file '/lib/modules/5.4.0-14-generic/modules.builtin.bin'
depmod: ERROR: ../libkmod/libkmod.c:515 lookup_builtin_file() could not open builtin file '/lib/modules/5.4.0-14-generic/modules.builtin.bin' 

The same happened when installing linux-modules-5.4.0-9-generic AND when uninstalling and re-installing 5.4.0-18-generic. So now I'll reproduce this second issue.. and I'm marking LP: #1863261 that SRU is needed for that case.

For this case.. it turns out that postinst script for linux-modules is executing:

$ sudo depmod -a -F /boot/System.map-5.4.0-18-generic 5.4.0-18-generic                                             

for the first time when /lib/modules/5.4.0-18-generic/modules.builtin.bin DOES NOT exist yet.

an easy way to reproduce is this:

$ sudo rm /lib/modules/5.4.0-18-generic/modules.builtin.bin                                                        

and then:

$ sudo depmod -a -F /boot/System.map-5.4.0-18-generic 5.4.0-18-generic                                             
depmod: ERROR: ../libkmod/libkmod.c:515 lookup_builtin_file() could not open builtin file '/lib/modules/5.4.0-18-generic/modules.builtin.bin'
depmod: ERROR: ../libkmod/libkmod.c:515 lookup_builtin_file() could not open builtin file '/lib/modules/5.4.0-18-generic/modules.builtin.bin'
depmod: ERROR: ../libkmod/libkmod.c:515 lookup_builtin_file() could not open builtin file '/lib/modules/5.4.0-18-generic/modules.builtin.bin'
depmod: ERROR: ../libkmod/libkmod.c:515 lookup_builtin_file() could not open builtin file '/lib/modules/5.4.0-18-generic/modules.builtin.bin'

the second time you run same command, it will not have these errors messages because "modules.builtin.bin" file will already have been created.