EU investing $11.5B in AI gigafactories to rival US, China
What's the story
The European Union (EU) has announced a funding plan of €10 billion ($11.5 billion) for the construction of seven artificial intelligence (AI) gigafactories. The move is part of the bloc's efforts to bridge the technological gap with the US and China. The European Commission hopes this public financing will attract an additional €20 billion ($22.8 billion) in private investment, further boosting the initiative.
Tech independence
EU's tech sovereignty push
Henna Virkkunen, the Commission's executive vice president in charge of tech sovereignty, emphasized the importance of AI gigafactories.
She said, "Access to the raw scale of computing power within AI gigafactories is a strategic necessity for Europe as AI development accelerates."
The EU's push for "tech sovereignty" has become more urgent amid concerns over reliance on foreign technologies that could be weaponized against Europeans.
Enhanced capacity
Gigafactories to boost EU's computing power
The proposed gigafactories are expected to be equipped with at least 100,000 cutting-edge AI chips each.
This would make them roughly four times more powerful than the data centers currently operating in the EU.
The current computing power of the EU, provided by a network of 19 AI data centers from Finland to Spain, will more than double when these seven gigafactories become operational.
Market dynamics
Europe's lag in AI development
A 2025 report by the US Federal Reserve highlighted Europe's lag behind the US and China in key areas of AI development.
China boasts a massive electricity capacity for data centers, while the US dominates private AI investment.
A Commission report presented to the European Parliament in June revealed that Europe doesn't manufacture many components needed for data centers, and electricity costs can be two or three times higher than in the US and China.
Provider dependence
Risks of reliance on foreign technologies
The Commission report also warned that European businesses and public authorities will continue to depend on US AI providers.
This could hurt European service providers struggling at the frontier of technology.
The report also cautioned about the risks of data exposure to third-country access, and service continuity threats posed by reliance on hyperscale cloud and AI computing service providers for highly critical use cases.