EU's AI Factory Push Risks Undermining Chip Sovereignty Goals
Brussels' plan to triple data center capacity depends heavily on US-designed chips and Asian manufacturing, creating a strategic dependency trap.
The European Union is racing to build an "AI Continent" with 19 AI factories and up to five gigafactories, aiming to triple data center capacity within five to seven years. But this infrastructure surge exposes a glaring contradiction: the chips powering these facilities will come almost entirely from American designers and Asian foundries, undermining the bloc's own semiconductor sovereignty strategy.
The Numbers Don't Add Up
The European Chips Act, adopted in 2023, set an ambitious target of capturing 20% of global semiconductor production by 2030. Current projections from the European Commission and the European Court of Auditors place Europe at approximately 11.7% by that deadline. Meanwhile, SEMI forecasts indicate Europe will meet only about 68% of its semiconductor demand through domestic production by 2028.
The math gets starker when examining the AI Continent plan's hardware requirements. The Center for European Policy Studies (CEPS) estimates each AI factory site requires up to 25,000 advanced chips, while a gigafactory demands at least 100,000. These processors must be sourced from a supply chain Europe barely controls.
Geographic Dependencies
Taiwan produces approximately 90% of the world's most advanced chips below 7nm nodes—the very processors AI workloads require. The EU holds just 4% of the global market for semiconductor packaging, assembly, and testing. While Europe possesses critical assets like ASML's lithography equipment and imec's research capabilities, it lacks a comprehensive domestic supply chain for advanced AI processors.
The result, according to CEPS, is that "computing infrastructure is physically located in Europe but remains technologically dependent on a single American supplier." Nvidia supplies most GPUs deployed across Europe, and its CUDA software platform underpins much of the continent's AI ecosystem.
Strategic Vulnerability
This dependency creates what policy analysts describe as a "demand trap." The AI expansion risks replacing one strategic vulnerability (Asian manufacturing dependence) with another (US technology dependence), leaving Europe exposed to geopolitical leverage from both directions.
"The challenge is to reduce dependencies that could become geopolitical vulnerabilities," said Toni Roldán-Monés, economist and Assistant Professor of Public Policy at IE University.
The EU faces a narrow window to align its AI deployment timeline with realistic chip production targets. Without accelerated investment in domestic fabrication capacity and alternative supplier diversification, the AI Continent plan may achieve computational scale at the cost of strategic autonomy—the opposite of what the Chips Act intended.