The European Union is offering 10 billion euros in public funding for companies to build seven AI gigafactories, as it tries to narrow the gap with the United States and China in artificial intelligence. The European Commission said on Thursday it wants the funding to help attract another 20 billion euros in private investment.

The planned facilities are part of Brussels' wider push for what it calls tech sovereignty, amid concerns in Europe about relying on foreign technology providers. The Commission said companies can now bid for contracts to build the gigafactories, which are expected to have at least 100,000 cutting-edge AI chips each and be around four times more powerful than the data centres currently operating in the EU.

"Access to the raw scale of computing power within AI gigafactories is a strategic necessity for Europe as AI development accelerates," said Henna Virkkunen, the Commission executive vice-president in charge of tech sovereignty. The bloc's push has gained urgency as European leaders worry that dependence on foreign technologies could be "weaponised" against Europeans. US President Donald Trump has criticised the EU over its tech regulations, while China has restricted supplies of minerals critical to the sector.

The EU's existing computing power is delivered through a network of 19 AI data centres spread from Finland to Spain. The Commission said that capacity will more than double once the seven gigafactories become operational. But Europe remains well behind the US and China in areas critical to AI development, according to a 2025 assessment by the US Federal Reserve. It said China has huge electricity capacity for data centres, while the US attracts the lion's share of private AI investment.

A Commission report presented to the European Parliament in June said Europe does not manufacture many of the millions of components needed for data centres, and that electricity in the EU can cost two or three times as much as in the US and China. "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 report said, adding that the bloc's top five cloud service providers are all American. "Dependence on hyperscale cloud and AI computing service providers, particularly for highly critical use cases, will continue to expose data to third-country access and carry risks to service continuity, endangering operational autonomy."

France's Mistral currently runs one of the EU's biggest AI data centres at its Paris campus. The company makes the Le Chat chatbot, but it has not kept pace with US companies such as OpenAI, which makes ChatGPT, or Chinese rivals such as DeepSeek. While leaders including French President Emmanuel Macron have warned about Europe lacking homegrown AI companies, concerns have also grown across the continent over the economic disruption and privacy implications of the technology.

The Commission said AI products developed through the expanding data centre network will "follow EU standards on data protection, safety, security and ethics". In June, 40 mayors from cities around the world, from Phoenix to Melbourne, signed a pact aimed at limiting the impact of AI data centre construction on natural resources, energy prices and climate targets. Overall, the EU's plan combines public and private funding to expand computing capacity, reduce dependence on foreign providers and strengthen its position in the global AI race.

With PTI Inputs

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