EU advances tech sovereignty plan to back local cloud, AI and chip capacity

Traders Union
All News
Financial News
EU tech sovereignty plan

Highlights

EU draft tech sovereignty strategy proposes the Cloud and AI Development Act to triple EU data centre capacity within five to seven years.
The initiative targets reducing EU dependence on U.S. providers like Amazon, Microsoft, and Google, who currently hold over 70% of the EU cloud market.
Brussels plans a second version of its chips law to stimulate domestic chip demand and manufacturing, aiming to link EU suppliers and users via offtake agreements.

Draft strategy outlines support for European providers

As first reported by the Financial Times, a draft European tech sovereignty strategy says the EU needs to strengthen domestic capabilities and support European alternatives across sectors including semiconductors, cloud computing and AI. The document, which is still subject to change before publication next week, marks a shift in the European Commission’s approach from mainly regulating large U.S. technology groups to more actively promoting homegrown services.

At the core of the plan is a proposed Cloud and AI Development Act designed to speed up the expansion of European data centre capacity by simplifying and harmonising approval procedures. The strategy sets a goal of tripling EU data centre capacity over the next five to seven years and encourages the development of what it describes as sovereign cloud and AI services.

The draft also says European governments would carry out sovereignty risk assessments to improve resilience and identify regional alternatives. To prevent what the Commission calls sovereignty-washing, it plans to define four levels of cloud sovereignty based on criteria such as control of the service, supply chains, AI data processing, infrastructure location and cyber security.

Market impact and semiconductor expansion

The initiative could benefit existing European technology groups including SAP, Mistral and OVHcloud as Brussels tries to shift more demand toward regional providers. More than 70 per cent of the EU cloud market is currently dominated by Amazon, Microsoft and Google, underlining the scale of the bloc’s dependence on U.S. companies.

Those concerns have intensified in recent months as officials and businesses weigh the risk that President Donald Trump could restrict access to critical American technology services. In response to European unease, some U.S. companies have offered customers more control over data localisation, and Microsoft has said it would challenge in court any U.S. government order to halt cloud services for European customers.

Brussels is also preparing a second version of its chips law to strengthen domestic semiconductor manufacturing and reduce reliance on foreign suppliers. The planned measures seek to stimulate demand for chips designed and made in the EU, including by linking suppliers and users through offtake agreements, while the Commission says the broader strategy is intended to build strategic counterweights rather than promote isolation or protectionism.

In our earlier article on Nvidia chip smuggling allegations and export-control risks, we noted that Taiwanese authorities uncovered a scheme to move Nvidia chips into China, raising the likelihood of stricter enforcement and new restrictions. We also highlighted how these geopolitical pressures can disrupt semiconductor supply chains and add uncertainty for companies exposed to cross-border controls, even when longer-term demand trends remain supportive.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.