EU Invests $11.4 Billion in AI Gigafactories to Compete Globally

The European Union announced Thursday it is allocating 10 billion euros ($11.4 billion) to fund the construction of seven AI gigafactories, a significant investment aimed at enhancing its artificial intelligence capabilities and reducing its reliance on foreign technology.

The European Commission, the bloc's executive arm, stated that this public funding is intended to attract an additional 20 billion euros ($22.8 billion) in private investment. The initiative is part of a broader strategy to establish "tech sovereignty" within the EU, driven by concerns over dependence on technologies from providers in the U.S. and China.

These planned gigafactories are designed to house at least 100,000 cutting-edge AI chips each, significantly increasing the EU's computing power. According to the Commission, this will more than double the bloc's current AI data center capacity, which is spread across 19 facilities from Finland to Spain.

Europe currently lags behind the U.S. and China in key areas of AI development. A 2025 assessment by the U.S. Federal Reserve noted China's substantial electrical power capacity for data centers and the U.S.'s dominance in attracting private AI investment. A June report to the European Parliament highlighted that the EU manufactures few components needed for data centers and faces higher electricity costs compared to the U.S. and China.

This disparity has led to a situation where European businesses and public authorities often depend on U.S. AI providers, impacting the competitiveness of European service providers. The report identified all of the EU's top five cloud service providers as American companies, raising concerns about data access by third countries and risks to service continuity.

While European companies like France's Mistral are developing AI technologies, such as its Le Chat chatbot, they have not yet matched the pace of U.S. firms like OpenAI or Chinese competitors like DeepSeek. The EU's proposed AI data centers are expected to operate under EU standards for data protection, safety, security, and ethics, potentially aligning with regulations like the Digital Services Act and the Digital Market Act.

The push for domestic AI infrastructure comes amid broader discussions about the economic and privacy implications of AI. In June, mayors from cities globally signed a pact to mitigate the environmental and economic impacts of AI data center construction.