EU bets billions on AI data centers, but nine member states refuse to commit funds

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BRUSSELS — The global frenzy to build massive AI data centers is coming to Europe. Just not all of Europe.

Two-thirds of European Union governments have pledged money to back an EU plan to create seven large AI compute hubs, the bloc’s most significant industrial policy push in the global race for artificial intelligence infrastructure. But nine countries have refrained from committing funds at a time when national budgets are already stretched.

The United States has so far led the global race to provide enough compute power to feed the artificial intelligence boom, with tech giants like OpenAI, Anthropic and Elon Musk’s xAI putting in private investment through projects like Stargate and Colossus, and building out their lead in expanding data centers.

In Europe, Commission President Ursula von der Leyen announced a plan last year to spend EU funding to establish seven so-called gigafactories — three larger and four smaller ones — across the EU, meant to help researchers and startups train very large AI models.

Before starting the development of the AI hubs, governments have to commit to buying compute power from their national gigafactories project. Those commitments have to match or exceed whatever funding the EU has promised. Their support is key to convincing hesitant private investors that face higher energy prices and longer permitting procedures.

Member countries had to show their cards in response to the European Commission by late July. Two-thirds of EU members have pledged funding to support industry consortia that bid to host one of the seven hubs, committing around €3 billion in total, according to a European Commission document .

For some governments, a budgetary operation amounting to several tens or hundreds of millions of euros spread over the next decade is a no-go.

The Dutch government said in a March letter that “in the current budget there’s no room for committing to the required financial obligations.” The cabinet would opt for a “flexible and sustainable further development of AI infrastructure, without locking in a major pre-reservation by the government at possible future gigafactories.”

Other countries had already pledged money on earlier AI compute projects, such as the much smaller AI Factories, and wish to focus on those.

The plan is turning into a massive public-private partnership in which “the European Union and the member states come to co-finance part of the gigafactories,” a senior Commission official told reporters at the end of July. Public funding won’t exceed 35 percent of the total investment, officials said, so industry has to pitch in the rest.

Prominent European companies have already expressed interest. In Spain, Telefónica and Banco Santander teamed up to launch a bid. But that enthusiasm is matched by criticism, as politicians and experts push back and question the business case behind the gigafactories.

18 out of 27 European governments have promised to put money on the table in some form.

France, Denmark, Poland and the Czech Republic have all pledged to commit €100 million for a “smaller” gigafactory. Portugal, Spain, Germany, Italy and Greece all plan to splash €200 million on a “larger gigafactory.”

The most ambitious bid is Germany’s: The country has already committed an additional €800 million to the buildout, bringing the total national contribution to €1 billion.

Other countries have pledged smaller sums, ranging from €50 million in Sweden to as little as €1 million in Lithuania, as they seek a smaller site connected to the main site in the host country. Croatia, Hungary and Lithuania all back Poland’s bid, for example, with a combined €36 million.

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Roberto Viola, the bloc’s top civil servant on digital policy, praised the initiative in February as a “miracle that becomes real.”

The European Commission is set to select seven projects early next year and support them with an initial €100-200 million depending on the size, followed by another €400-€800 million later on.

In many cases, budgetary preparations are underway even if governments have no certainty that their local bid will be selected and the impact won’t be felt for another two years.

In mid-July, the Polish Council of Ministers adopted a resolution to approve Poland’s €100 million commitment, its Digital Affairs ministry said. Lithuania’s commitment was also approved mid-July, its economy ministry said.

The actual investment comes only when the gigafactories are operational, when the government becomes a “guaranteed customer,” the scheme stipulates.

“There is a setup period of up to 18 months during which the facility is configured, deployed and prepared for operation … Public payments start only at that point”, a spokesperson for the Irish Department for Further and Higher Education said. Ireland has pledged €10 million to a gigafactory hosted by France.

The Commission plans to select the winning bids early next year, after which the factories can be built in the next year-and-a-half. It means many governments will only have to start paying in 2028, with payments spread out over the following five years.

This article has been updated.