EU invests €10B in 7 AI gigafactories to close gap with US, China

The European Union will fund seven artificial intelligence gigafactories across the bloc with €10 billion ($11.5 billion), the European Commission said Thursday, as the 27-nation bloc accelerates efforts to close a computing power gap with the US and China that has left European startups dependent on American cloud providers.

"Access to the raw scale of computing power within AI gigafactories is a strategic necessity for Europe as AI development accelerates," Henna Virkkunen, the Commission's executive vice president overseeing tech sovereignty, said in a statement.

The public financing is expected to draw an additional €20 billion in private investment, the Commission said. Each gigafactory will deploy at least 100,000 cutting-edge AI chips, making them roughly four times more powerful than the data centers currently operating in the EU's existing network of 19 AI facilities stretching from Finland to Spain. The call for tenders closes Nov. 12, 2026, with award decisions expected by early 2027 and operations to begin within 18 months of contract signing.

The initiative underscores Europe's struggle to compete in an AI arms race dominated by the US and China. A 2025 assessment by the US Federal Reserve found Europe lagging far behind both rivals in crucial sectors for AI development. China has enormous electrical power capacity for data centers, while the US captures the majority of private AI investment. A Commission report presented to the European Parliament in June warned that electricity costs in the EU can be double or triple those in the US and China, and that the bloc's top five cloud service providers are all American — Amazon Web Services, Microsoft Azure, Google Cloud, and others.

The Competitive Landscape

The EU's dependence on foreign AI infrastructure carries risks beyond cost. "European businesses and public authorities will continue to rely on US AI providers to the detriment of European service providers struggling to work at the frontier," the Commission report said, warning that reliance on hyperscale cloud and AI computing services "will continue to expose data to third-country access and carry risks to service continuity, endangering operational autonomy."

France's Mistral AI currently operates one of the largest AI data centers in the EU at its Paris campus, powering its Le Chat chatbot. But Mistral has not kept pace with American rivals like OpenAI, maker of ChatGPT, or Chinese competitors such as DeepSeek, highlighting the scale disadvantage the gigafactories aim to address.

Eighteen member states have signed a joint procurement agreement with the European High Performance Computing Joint Undertaking to support the projects. The funding is split into two lots: Lot 1 will support up to four projects with as much as €100 million in EU funding in phase one and up to €400 million per project in phase two, while Lot 2 will support up to three projects with up to €200 million in phase one and up to €800 million in phase two. Consortia may procure hardware from any provider in Europe or likeminded countries, with part of the procurement dedicated to European startups and scale-ups.

The Commission has signed letters of intent with AMD, Nvidia and Qualcomm to ensure consortia have access to the necessary chips, though the initiative also aims to strengthen Europe's own digital supply chain. The gigafactories will operate under EU data protection, safety and ethics standards — a contrast to the less regulated AI environments in the US and China.

For investors, the €10 billion commitment signals that European governments are willing to deploy significant public capital to build sovereign AI infrastructure. Companies positioned to benefit include European data center operators, energy providers serving high-power computing facilities, and chip suppliers like Nvidia and AMD that will provide hardware for the buildout. The initiative also creates a potential headwind for US cloud hyperscalers if European enterprises shift workloads to EU-governed infrastructure over time. However, the two-to-three year timeline before operations begin means the competitive landscape will continue to shift — and the US and China are not standing still.

This article is for informational purposes only and does not constitute investment advice.