EU Unveils USD 11.4 Billion Plan for Seven AI Gigafactories to Close Gap With US, China

The European Union has unveiled a €10 billion (USD 11.4 billion) public funding plan to build seven AI gigafactories as it races to reduce its growing artificial intelligence gap with the United States and China. The European Commission expects the investment to attract another €20 billion (USD 22.8 billion) from private companies, taking the total planned investment beyond €30 billion.

The programme is part of the EU's InvestAI strategy and its push for technological sovereignty, as European leaders worry that dependence on foreign AI platforms, cloud providers and chips could become a strategic weakness. European Commission Executive Vice President Henna Virkkunen said, “ Access to the raw scale of computing power within AI gigafactories is a strategic necessity for Europe as AI development accelerates.”

The planned gigafactories will be more than traditional data centres. They will combine advanced AI chips, supercomputing systems, cloud infrastructure, high speed networks and research facilities to help companies train and deploy advanced AI models. Each facility will have at least 100,000 cutting edge AI chips, making them around four times more powerful than existing AI data centres in Europe.

The seven new facilities will expand the EU's existing network of 19 AI factories from Finland to Spain and are expected to more than double Europe's AI computing capacity. The initiative received strong industry interest, with 77 proposals from 16 EU countries covering around 60 possible sites. The bidding process is open until November 12, 2026, with selected projects expected to be announced in early 2027 and operations beginning around 18 months after contracts are signed.

However, Europe's investment remains far behind the scale of the US AI race. The US backed Stargate AI infrastructure project, involving companies such as OpenAI, Oracle and SoftBank, has announced plans for up to USD 500 billion in AI infrastructure investment over four years. US technology giants including Microsoft, Amazon, Google and Meta are also spending hundreds of billions of dollars on AI data centres, chips and computing systems.

China is also expanding AI infrastructure through government support, technology companies and domestic chip development. Its advantages include huge electricity capacity, large scale data centre expansion and strong state backing, although Beijing faces restrictions on access to some advanced AI processors due to US export controls.

The EU's challenge goes beyond money. Europe does not produce enough advanced AI chips and remains dependent on foreign suppliers, especially for processors and cloud services. Companies including Nvidia, AMD and Qualcomm have expressed interest in supporting the programme, but Europe lacks a major domestic semiconductor ecosystem.

Energy is another challenge. AI data centres require enormous electricity supplies, while European power costs can be significantly higher than in the US and China. Environmental concerns over energy use, water consumption and climate impact are also increasing.