EU AI gigafactory plan delayed, frustrating partners

The European Union’s ambitious plan to construct five AI gigafactory data centres is hitting serious roadblocks before construction can even begin. Delays in the bidding process and a lack of clear funding have left the initiative in a precarious position, with only two of the five planned facilities eligible for subsidies before the EU’s next budget cycle in 2028. Originally scheduled for May, the bidding has now been pushed to July, and at least two major consortia are reconsidering their participation if the project is significantly scaled back, according to sources familiar with the situation.

The initiative, unveiled last year to spur European AI infrastructure investment, initially attracted interest from roughly 70 companies across the bloc. That number has now dwindled to about 10 groups expected to submit formal bids, with a maximum of one per country. The European Commission has repeatedly delayed publishing the criteria for the data centres. Maria Nowicka, a Brussels-based policy researcher at the think tank Interface, remarked, “I think I’ve lost count” of all the postponements.

The funding gap is a central issue. The €20 billion ($23.3 billion) plan relies on less than half coming from public sources: €4.1 billion in EU subsidies, matched by an equal amount from host member states, with private investors covering the rest. However, the phased funding structure means most money won’t arrive until 2028 and 2030, years after the infrastructure is needed. For context, US utilities alone plan to spend $1.4 trillion on grid infrastructure for AI by 2030, and American hyperscalers are pouring hundreds of billions annually into data centres, including on European soil.

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

The consortium problem adds another layer of complexity. 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, and in France, Mistral AI is in talks to join a €10 billion project. But shifting goalposts are eroding enthusiasm. The Schwarz Group’s interest has waned 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 noted the company is considering holding only 10% to 15% of a joint venture bid.

Mistral AI CEO Arthur Mensch criticized 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 is unfolding. 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.