Europe Wants Sovereign AI. Most of the Chips Are American.

EBM NEWSDESK ANALYSIS-Katie Winearls

The EU’s tech sovereignty package is the most ambitious industrial policy statement Brussels has made in a generation. The gap between the ambition and the infrastructure needed to deliver it is equally historic.

On 3 June, the European Commission unveiled the European Technological Sovereignty Package — a sweeping set of draft laws and strategies designed to reduce the continent’s dependence on American and Chinese technology. The package covers semiconductors, artificial intelligence, cloud computing and open-source software. Commission President Ursula von der Leyen was direct about the stakes. “We cannot afford to depend on others for the technologies that keep our hospitals running, our energy grids stable and our services secure.”

The ambition is real. The dependency it is trying to address is equally real — and considerably harder to resolve than the policy documents suggest.

What the Package Actually Contains

The sovereignty package has four pillars. Chips Act 2.0 moves beyond the supply-side manufacturing goals of the original 2023 legislation, shifting weight to demand-side incentives and prioritising the construction of a European foundry capable of producing advanced semiconductors for AI workloads. The Cloud and AI Development Act aims to triple European data centre capacity, streamline cross-border deployment and introduce a single EU-wide framework to assess whether cloud and AI infrastructure meets sovereignty standards. Two further pillars address open-source software development and AI model governance.

The investment requirements are substantial. Estimates put the cost at €120 billion for semiconductors, €200 billion for data centres by 2036, €100 billion for cloud and AI, and €2 billion for open-source software over seven years. The annual energy investment gap required to power this buildout is put at €400 billion. Brussels is betting heavily on private capital to close most of it.

The Kill Switch Moment

What gave the package its political urgency was an incident that crystallised European fears about digital dependency in a way that years of policy discussion had not. When the Trump administration sanctioned the International Criminal Court’s chief prosecutor, Microsoft cancelled his email account. A US technology company, operating under US extraterritorial law, had functionally disabled a senior international official at Washington’s direction.

For European policymakers, the implication was uncomfortable and concrete. The same mechanism — a US government instruction to a US technology company — could theoretically be applied to European government systems, defence networks or critical infrastructure at any point of geopolitical friction. Henna Virkkunen, the Commission’s Executive Vice-President for tech sovereignty, stated it plainly: “We want to be sure nobody has a kill switch.”

France has already begun transitioning government institutions away from American software suites and search engines toward local and open-source alternatives. The broader EU package formalises and accelerates what individual member states have been doing piecemeal.

The Gap Between Ambition and Infrastructure

Here is the problem. Europe’s AI sovereignty agenda requires advanced semiconductors — specifically the kind of high-performance GPUs that power large-scale AI training and inference workloads. Those chips are overwhelmingly designed and manufactured by Nvidia, which is an American company. The most advanced manufacturing processes are concentrated at TSMC in Taiwan and Samsung in South Korea. The only European company with meaningful exposure to this supply chain is ASML — the Dutch lithography equipment maker whose extreme ultraviolet machines are essential to producing leading-edge chips. ASML does not make chips. It makes the machines that make chips. And it has already walked back its 2026 growth forecast due to trade tensions.

Forrester’s research is blunt about the near-term outlook. Despite the sovereignty push, no European enterprise will shift entirely from US hyperscalers — AWS, Microsoft Azure, Google Cloud — in 2026. European tech cloud services are overwhelmingly American. The regulatory and commercial infrastructure required to replace them does not yet exist and cannot be built quickly enough to matter in the current geopolitical cycle.

The Chips Act 2.0’s foundry ambition faces similar structural headwinds. Building a leading-edge semiconductor fabrication plant takes five to seven years from planning to production. It requires talent pools that Europe does not currently have at scale, supply chains that do not yet exist domestically, and energy infrastructure that is itself constrained. Germany’s public cloud spend is growing 17% in 2026 — almost entirely flowing to American providers.

What Europe Does Have

The picture is not entirely bleak. France has a genuine competitive advantage in AI, quantum computing and space technology, anchored by a vibrant startup ecosystem including Mistral AI, Hugging Face and Dataiku. Europe’s total technology spending will exceed €1.5 trillion in 2026 for the first time, growing at 6.3% — a meaningful demand signal. Nordic and Southern European data centre markets are growing rapidly as organisations seek energy-efficient, sovereignty-aligned infrastructure outside of constrained hubs like London and Dublin.

The sovereignty package also has genuine regulatory teeth in areas where Europe already has leverage. Restricting US cloud platforms from handling sensitive government data — currently under active consideration — would force real structural change in how European institutions procure technology. That is achievable without building a single chip.

The Verdict

Europe’s tech sovereignty package is the right diagnosis delivered a decade late. The continent is structurally dependent on American AI infrastructure and American cloud services in ways that create genuine strategic vulnerability. The package correctly identifies the problem, proposes credible long-term remedies and creates the regulatory framework to accelerate change.

What it cannot do is close a fifteen-year technology gap in a single legislative cycle. The chips that will power Europe’s AI ambitions between now and 2030 will be predominantly American. The cloud services that will process European government and enterprise data for the next five years will be predominantly American. The sovereignty package changes the trajectory. It does not change the current position.

Brussels is building the runway. Europe has not yet reached the plane.

“When the Trump administration sanctioned the ICC prosecutor, Microsoft cancelled his email account. For European policymakers, that was the kill switch made visible. The tech sovereignty package is the response.”

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• SpaceX’s IPO Is Not a Tech Listing. It’s a Defence Privatisation — The infrastructure argument Brussels applies to AI and chips applies with equal force to space.
• WEF Names 100 Technology Pioneers for 2026 — The early-stage companies building AI infrastructure are the ones Europe needs to anchor domestically. Most aren’t European.

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