Europe has inserted itself in the AI race after watching China and the US tussle for AI dominance over the last two years. According to reports, the European Commission is raising $20 billion to build four “AI gigafactories.”
European Commission President Ursula von der Leyen revealed the details for the first time at the February AI summit in Paris. It was part of InvestAI, Europe’s 200 $216.92 billion response to the $500 billion US Stargate plan.
We are supercharging European innovation to remain competitive.
We selected seven consortia to establish the first AI factories across Europe, representing €1.5 billion.
We will also mobilise €200 billion with InvestAI investments, including €20 billion for AI gigafactories.… pic.twitter.com/7umoZs5bMt
— European Commission (@EU_Commission) March 10, 2025
She described gigafactories as a public-private partnership that will enable all scientists and companies to develop the most advanced very large models needed to make Europe an AI continent.
They are to be financed through a new 20 billion euro fund, with money drawn from existing EU programs and member states.
Von der Leyen said gigafactories will contain 100,000 cutting-edge chips each. This will make them more than four times larger than the biggest supercomputer currently under construction in the EU.
US chipmaker Nvidia sells the cutting-edge GPU chips needed to train AI for around $40,000 each. This translates to a price tag of several billion euros per gigafactory.
Why is the project close to impossible?
The US government, under former President Joe Biden, capped access to AI chips to prevent gigafactories from being built in many European countries. However, it is not clear if the Trump administration will uphold that.
From what the US has done with China, Trump is willing to keep America at the top. DeepSeek claimed to have used about 2,000 Nvidia H800 chips, which are less advanced than the most cutting-edge chips, to train its model. They used them because they were freely exported to China until October 2023.
This means the project could face difficulties in obtaining the Nvidia chips like other projects. Kevin Restivo, of data center consultancy CBRE, said, “There’s nothing to say that the government can’t get its hands on those chips or that […] great projects can’t come from it, but it’s unlikely to happen in the short term.”
In retrospect, Europe’s previous major support plan for technology infrastructure, the 2023 Chips Act, failed to meet the goals of bringing cutting-edge chip manufacturing to Europe. It didn’t even manage to reach 20% of global production. However, it did lead to investment in new factories needed to make automotive chips.
The project is likely also to face challenges in finding suitable sites and electricity. Not to forget that since there aren’t any big cloud service companies in Europe like Amazon and Google or companies like OpenAI that make ChatGPT with millions of paying customers, it’s risky to build hardware of this size.
The EU commission to upgrade supercomputers
Alongside the gigafactory plan, the Commission is also upgrading 12 scientific supercomputer centers to turn them into AI factories.
Potential beneficiaries of the supercomputing expansion include European chipmakers that make non-GPU chips, which are still useful in data centers, including Germany’s Infineon and ST Microelectronics of France. In addition, startups, including France’s SiPearl and AxeleraAI of the Netherlands, could also use it.
Kimmo Koski, managing director of Finland’s LUMI supercomputer, said that supercomputers are already used for machine learning projects, alongside scientific uses such as in climate modeling. He pointed to Silo AI, a Finnish firm that used LUMI to help develop large language AI models before being snapped up in July last year by US chipmaker AMD for $665 million.
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