EU AI gigafactory plan stumbles as delays alienate partners

The European Union’s plan to build five massive AI data centres, each with one gigawatt of capacity and approximately 100,000 advanced chips, is stumbling before it starts. The bidding process, originally scheduled for May, has been pushed to July. A lack of funding clarity means only two of the five planned centres can receive money before the EU’s next budget cycle begins in 2028. At least two consortia are reconsidering whether to bid at all if the project is significantly downsized, according to people familiar with the matter.

The initiative, announced last year to accelerate European AI infrastructure investment, initially drew interest from about 70 companies across the bloc. That number has narrowed to approximately 10 groups expected to submit bids, with a maximum of one per country. The European Commission has delayed publishing its criteria for the data centres multiple times. “I think I’ve lost count” of all the delays, said Maria Nowicka, a Brussels-based policy researcher at the think tank Interface.

The funding gap

The €20 billion ($23.3 billion) plan envisions less than half coming from governments. The EU would provide €4.1 billion in subsidies, matched by an equal amount from member states hosting the centres, with private investors financing the rest. But the phased funding structure, with money earmarked in 2028 and 2030, means the subsidies arrive years after the infrastructure is needed. US utilities alone plan to spend $1.4 trillion on grid infrastructure for AI by 2030, and American hyperscalers are investing hundreds of billions annually in data centres, including on European soil.

The scale mismatch is stark. SoftBank recently announced up to €75 billion in data centre investment in France alone, more than three times the entire EU programme. Meta is raising $13 billion for a single Texas data centre. The EU’s €4.1 billion in direct subsidies, spread across five countries, is modest relative to what individual companies are spending per facility.

The consortium problem

Early proposals were structured as national consortia pooling resources from multiple companies. In Germany, the Schwarz Group (owner of Lidl) and Deutsche Telekom both expressed interest in leading bids. In Spain, Telefónica is leading a consortium. In France, Mistral AI is in discussions to join a €10 billion project.

But the moving goalposts are eroding enthusiasm. The Schwarz Group’s interest has dampened due to the complex and lengthy tender process, according to a person familiar with its business. The company is building its own data centre south of Berlin without waiting for EU subsidies. Deutsche Telekom CEO Tim Hoettges said the company will only participate if industry and government customers guarantee demand. Telefónica’s COO said the company is considering holding only 10% to 15% of a joint venture bid.

Mistral AI’s CEO Arthur Mensch criticised the programme’s national framing: “One of the problems is that it’s kind of thought at a national level, which is completely stupid. Any successful endeavour on that domain needs to be European-wide and much larger than what is actually framed in the programme.”

Another EU tech policy stumble

The gigafactory delays echo the EU’s experience with its 2022 Chips Act, which failed to boost the bloc’s share of global semiconductor production despite a target of doubling it by 2030. French companies bid €10 billion for one of the five planned gigafactory sites, demonstrating private sector willingness that the EU’s bureaucratic process has struggled to harness.

The strategic motivation remains urgent. With transatlantic relations strained under Trump’s current term, the EU is promoting tech sovereignty as a matter of security, privacy, and competitiveness. Europe has led on AI regulation through the AI Act, but regulation without infrastructure means setting rules for a game played on someone else’s hardware.

Polish digital minister Dariusz Standerski, participating in the EU talks, confirmed the July bidding timeline and the two-phase funding structure. A Commission spokesperson said a call for proposals is expected to be approved “shortly after thorough preparations.” For the companies that have already moved on, building their own facilities without waiting for subsidies that may not arrive in time, the EU’s assurances may come too late to matter.