The European Union's ambitious €20 billion plan to construct five hyper-scale AI data centers faces significant obstacles due to repeated delays and funding uncertainties, putting it at risk of falling further behind in the global AI infrastructure race.
Reported bidding process postponements and unresolved subsidy funding timelines have dampened enthusiasm among some potential partners. The tender, originally scheduled to launch in May, is now expected to begin in July. According to Polish Digital Affairs Minister Dariusz Standerski, involved in EU negotiations, project funding will be distributed in two tranches, set for 2028 and 2030.
Concurrently, funding constraints threaten to limit progress; before the new budget cycle starts in 2028, only a maximum of two out of the five planned data centers are likely to receive financial backing.
This situation has raised concerns among EU officials that Europe risks missing another technology revolution led by Silicon Valley if it fails to invest substantially in local data center capacity. Meanwhile, external competitive pressure is mounting, highlighted by SoftBank Group's recent announcement of a potential €75 billion investment in data centers in France, a scale that dwarfs the EU's entire initiative.
Repeated Delays Undermine Plan Credibility
The European Commission has postponed the release of data center subsidy criteria multiple times, casting the entire project into uncertainty. Maria Nowicka, a policy researcher at the Brussels think tank Interface, noted that the "super factory" plan has sparked extensive political discussion but yielded little tangible progress. "I've lost count of the delays," she said. "There is almost no clear direction at the moment."
A European Commission spokesperson stated that the relevant call for proposals would be approved as soon as fully prepared. German newspaper Handelsblatt had previously reported on the disappointment among project stakeholders.
An initial tender that attracted interest from around 70 companies is now expected to see only about 10 consortiums submit bids, with each country limited to one proposal.
Funding Structure Shows Gaps, Scale Faces Downsizing Risk
Financially, the EU plans to provide €4.1 billion in subsidies, with host countries matching that amount, and the remainder covered by investors. Total government funding is projected to account for less than half of the overall cost.
However, informed sources indicate that the final approved data center scale may be significantly reduced, which would diminish the appeal of the cost-sharing model for partners.
At least two consortiums have indicated they may reconsider submitting bids if the project scale is notably downsized.
The EU's initial vision for each center involved 1 gigawatt of capacity, equipped with approximately 100,000 high-end chips, designed to compete with projects from US hyperscale cloud providers. This target now appears at high risk of not being met.
Corporate Enthusiasm Cools, Participation Turns Cautious
Several companies that initially showed strong interest in leading projects have lowered their participation expectations.
In Germany, Schwarz Group, parent company of supermarket giant Lidl, and Deutsche Telekom had both expressed interest in leading consortiums. However, the complex and lengthy tender process, along with evolving rules, has notably reduced Schwarz Group's enthusiasm. The group is now independently advancing a data center construction project in southern Berlin.
Deutsche Telekom CEO Tim Hoettges stated at an industry conference this week that the company would only consider joining a super factory project if industrial and government clients guaranteed demand. The company simultaneously announced plans to double the number of Nvidia processors at its Munich facility to 20,000 GPUs.
Spanish telecom Telefónica has adopted a more subdued stance. Chief Operating Officer Emilio Gayo stated at an industry event on May 27th that Telefónica "does not need to play the role of a main investor" and is considering taking a 10% to 15% stake in a bidding joint venture.
European AI Firms Call for Pan-European Approach, EU Tech Strategy Faces Scrutiny
Mistral AI, Europe's highest-valued AI startup, is in talks to join a French €10 billion data center consortium bidding for EU subsidies. However, Mistral CEO Arthur Mensch has criticized the plan's overall design.
"One of the problems is that this plan is entirely thought of at the national level, which makes no sense," Mensch said in an interview last month. "Any successful effort in this field must be pan-European and on a much larger scale than the current plan envisages."
The setbacks with the super factory plan have reignited doubts about the EU's ability to execute its technology policies. The 2022 Chips Act failed to achieve its goal of doubling the EU's share of global chip production, leaving Brussels nearly back to square one in semiconductors.
Meanwhile, US companies are deploying AI infrastructure globally at a faster pace. OpenAI, Anthropic, and Alphabet are pouring hundreds of billions of dollars into data centers, including accelerating expansion in Europe.
Within Europe itself, some private AI infrastructure projects are gaining momentum, further highlighting the relative sluggishness of the EU-led initiative.
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