Digital Sovereignty: Europe’s Bold Response to Tech Challenges

Faced with increasingly aggressive international competition, Europe has come to the realisation that it must assert its ability to guarantee true digital sovereignty. The economic and political future of the continent hinges on this imperative with the onset of vast digitalisation. Digital sovereignty is not just about controlling data flows or leading advancements in artificial intelligence; it also requires mastery of the foundational technologies that underpin them—chief among these are microprocessors.

 The European Union has of recent come to the realisation that it is somewhat lacking in digital autonomy, that there is a growing, hard-to-control economic and social influence exerted within its borders by non-EU companies. Data, artificial intelligence, IoT and other cutting-edge technologies are now essential elements of everyday life, and making sure bad-faith actors cannot abuse access to personal data and retaining control of the European digital ecosystems is crucial for socio-economic cohesion. The production of digital hardware is therefore key to ensuring control and data sovereignty long term.

This challenge is not merely about ensuring cybersecurity or technological innovation; it concerns the very future of the continent—economically, politically, and strategically.  With the US Cloud Act looming over the sector, ensuring digital sovereignty has never been more crucial. This extends beyond AI and data management to encompass the underlying hardware, including the microprocessors that power these systems. The question now is whether Europe can rise to this challenge in time to preserve its independence in the global tech race.

Challenges, opportunities and the US Cloud Act

Despite its aspirations, Europe faces significant challenges in achieving digital sovereignty. The European Cybersecurity Certification Scheme (EUCS), which was intended to establish a framework for digital independence, has already demonstrated critical shortcomings, notably with regards to the requirements relating to governing law and sovereignty. Many industry bodies have been putting pressure on Member States in the Council to reintroduce the sovereignty requirement, which was removed following a backlash from certain Member States and a joint statement. and there are still debates as to whether the High+ criteria should be included in the EUCS scheme. While the EUCS reflects Europe’s ambition, it is insufficient to counteract external threats effectively.

Christophe Fouquet, CEO of ASML, a Dutch multinational semiconductor equipment manufacturer, has emphasised the importance of Europe’s digital sovereignty. In a recent interview, he expressed concerns about the fragmentation of the global semiconductor supply chain, stating that such decoupling could be “exceedingly costly” and might drive countries like China to develop their own alternatives to ASML’s equipment. Fouquet’s remarks underscore the need for Europe to maintain control over critical technologies to ensure economic security and competitiveness in the global market. Nonetheless, this decoupling is sometimes the first step towards greater sovereignty, as illustrated by French start-up SiPearl, which designs semiconductors for supercomputers in Europe before manufacturing them in Taiwan. Philippe Notton, founder and CEO of SiPearl, explains “In an ideal world, we would manufacture in Europe, but the current situation compels us to make strategic choices. While there is a geopolitical risk with Taiwan, we can at least be confident that everything will operate smoothly from a technical standpoint”.

But extraterrestrial laws, like the US Cloud Act, are threatening moves towards greater sovereignty. The legislation enables American authorities to access data stored by US-based companies, regardless of where that data is physically located. For European businesses, this creates a precarious environment where sensitive data may be vulnerable to foreign oversight, undermining trust in cloud and data services provided by US companies. For instance, T-Systems delivers private, public, and hybrid cloud solutions with a strong focus on data sovereignty and GDPR compliance, ensuring data remains within Europe. This supports Europe’s goal of controlling its digital infrastructure and reducing dependence on non-European providers. CEO Adel Al-Saleh highlighted their commitment to European digital transformation: “Our goal is to digitalize European companies and the public sector by moving operations to the cloud. Together with Google Cloud, we will create a sovereign portfolio that gives clients full control over their data, software, and operations while leveraging Google Cloud’s power.” Therefore, T-Systems’ dependence on the American giant’s solutions exposes its customers to problems arising from US extraterritoriality…

This dependency on non-European technology providers creates a stark imbalance. It leaves Europe vulnerable to economic and technological exploitation, making the case for investing in sovereign digital infrastructure more urgent than ever. Switzerland appears to be showing the rest of Europe the way by investing 231 million dollars to create a ‘Swiss Government Cloud’ to manage the data of its federal administration. This is a major step towards digital sovereignty, which should also lead to cost savings.

Europe’s response

 Europe’s response to the challenges of digital sovereignty lies in fostering a robust ecosystem of technology companies capable of competing globally. Several enterprises and startups like SiPearl, Codasip or NcodiN are stepping up to ensure the continent’s digital independence. Infineon Technologies, a German multinational semiconductor manufacturer, is another excellent example. Its CEO, Jochen Hanebeck, has consistently advocated for strengthening Europe’s position in critical technology sectors. Infineon plays a vital role in areas such as automotive semiconductors and renewable energy solutions. Hanebeck has emphasized the importance of securing regional supply chains, investing in innovation, and ensuring that Europe remains competitive in emerging markets like electric vehicles and green energy systems.

Europe is not alone in its quest for digital sovereignty. Taiwan, for example, has successfully navigated the complexities of data sovereignty and technological independence. It recently pledged to invest $3 billion in AI sovereignty  As a global leader in semiconductor manufacturing, Taiwan has shown how strategic industrial policies and government support can secure a nation’s position in global supply chains. Europe could draw inspiration from this approach, adopting similar strategies to enhance its competitiveness.

And European companies represent a key part of the solution. Firms like SiPearl, a French startup in microprocessors and supercomputing solutions, embody the kind of forward-thinking, strategic industrial investment required to secure the continent’s future. Their innovations do more than ensure technological independence—they serve as a foundation for Europe’s broader economic and industrial sovereignty. “SiPearl emerged from our vision to establish a European benchmark in the semiconductor sector, focused on the high-performance computing segment. Our mission resonated with European authorities, who recognized its significance and supported our efforts with essential funding” explains CEO, Philippe Notton. This vision is completely in line with the reality on the ground and the Biden administration’s decision to limit cutting-edge microchip exports. The US decision is aimed primarily at China, but 17 European Union countries (out of 27) will see their imports of American microchips restricted each year with direct consequences for the development of data centres notably. European sovereignty in this area is more necessary than ever.

Europe’s future hinges on its ability to secure digital sovereignty amid mounting international pressures. This requires a unified approach involving government regulations, robust industrial policies, and the active participation of leading European companies. While challenges like the US Cloud Act and the limitations of the EUCS persist, Europe has the potential to overcome these obstacles. By fostering innovation, supporting strategic industries, and learning from successful international examples, the continent can ensure its independence in the next wave of global technological dominance. The time to act is now. Europe must seize the opportunity to preserve its sovereignty and ensure that its digital future is firmly in its own hands.

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