EU’s AI Data Center Plans Stumble Due to Delays, Funding Issues

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(Bloomberg) — The European Union’s €20 billion ($23.3 billion) investment plan for five massive artificial intelligence data centers is floundering, with delays and funding issues alienating some potential partners, according to people familiar with the matter.

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The EU announced plans to back so-called gigafactories last year to accelerate investment in AI infrastructure from private companies, but a lack of clarity about demand and when the subsidies will be available is threatening to undermine the initiative, the people said, asking not to be identified because the talks are private. 

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The bidding process was due to start in May and is now expected to begin in July, according to Polish digital minister Dariusz Standerski, who is participating in EU talks on the data centers. The projects will be financed in two phases, with funds earmarked in 2028 and 2030, he said in an interview. 

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The plan risks becoming the latest EU tech policy misstep, even as officials fear that failing to invest aggressively in domestic data centers will drive talent abroad and sideline Europe in another technological revolution led by Silicon Valley. Efforts to subsidize computing infrastructure are underway from Canada to South Korea and the Middle East, as governments seek to remain relevant in the global AI race dominated by the US and China. With trans-Atlantic relations increasingly strained in US President Donald Trump’s current term, the EU is also promoting tech sovereignty as a protective measure for its security, privacy and competitiveness. 

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US companies including OpenAI, Anthropic PBC and Alphabet Inc. are pouring hundreds of billions of dollars into data centers, including in Europe, and increasingly dominating the field. On the continent, some private efforts to build AI capacity are gaining steam even as the bloc spins its wheels. SoftBank Group Corp. recently announced to invest as much as €75 billion to build data centers in France, dwarfing the EU initiative. 

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The EU plan foresees subsidies to build at least five large-scale AI data centers each with a capacity of one gigawatt, enough to power over 700,000 homes. 

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“There’s been a lot of buzz, politically speaking” about the gigafactory plan even as the EU’s executive arm, the European Commission, has delayed publishing its criteria for the data centers multiple times, according to Maria Nowicka, a Brussels-based policy researcher for the think tank Interface. “I think I’ve lost count” of all the delays, Nowicka said. “There’s very little clarity.” 

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A lack of funding means only a maximum of two of the envisioned five data centers can get money before the EU’s new budget beginning in 2028, currently under negotiation, one of the people said. 

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A call for proposals is expected to be approved shortly after thorough preparations, according to a spokesperson for the European Commission. Handelsblatt reported some details about frustrations with the project earlier. 

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Mistral AI, Europe’s most valuable AI startup, is in discussions to join a French consortium developing a €10 billion data center project that will bid for EU funding. Chief Executive Officer Arthur Mensch has argued the initiative’s scope should be wider than funding individual national projects.