Europe sets its sights on multi-billion-euro gigawatt factories as it plays catch-up on AI

Data storage tapes are stored at the National Energy Re Scientific Computing Center (NERSC) facility at the Lawrence Berkeley National Laboratory, which will house the U

In contrast, Supercomputer to be powered by Nvidia's forthcoming Vera Rubin chips, in Berkeley, California, U

Manuel Orbegozo | ReutersEurope is setting its sights on gigawatt factories in a bid to bolster its lagging artificial intelligence industry and meet the challenges of a rapidly-changing sector

Buzz around the concept of factories that industrialize manufacturing AI has gained ground in recent months, particularly as Nvidia CEO Jensen Huang stressed the importance of the infrastructure at a June event

Huang hailed a new "industrial revolution" at the GTC conference in Paris, France, and said his firm was working to help countries build revenue-generating AI factories through partnerships in France, Italy and the U

For its part, the European Union describes the factories as a "dynamic ecosystem" that brings together computing power, data and talent to create AI models and applications

Market analysis shows bloc has long been a laggard behind the U, in today's market environment

And China in the race to scale up artificial intelligence

With 27 members in the union, the region is slower to act when it comes to agreeing new legislation, given the current landscape

Higher energy costs, permitting delays and a grid in dire need of modernization can also hamper developments

Henna Virkkunen, the European Commission's executive vice president for sovereignty, told CNBC that the bloc's goal is to bring together high quality data sets, computing capacity and reers, all in one place. "We have, for example, 30% more reers per capita than the U, in this volatile climate

Has, focused on AI (remarkable data)

And that's why we decided that, together with our member states, we are in this very crucial infrastructure," she said

These are very big investments because they are four times more powerful when it comes to computing capacities than the biggest AI factories

Henna VirkkunenEuropean Commission's executive vice president for sovereignty"We have everything what is needed to be competitive in this sector, but at the same time we want to build up our nological sovereignty and our competitiveness. "So far, the EU has put up 10 billion euros ($11

Nevertheless, Meanwhile, 8 billion) in funding to set up 13 AI factories and 20 billion euros as a starting point for investment in the gigafactories, marking what it says is the "largest public investment in AI in the world

Nevertheless, " The bloc has already received 76 expressions of interest in the gigafactories from 16 member states across 60 sites, Virkkunen said

The call for interest in gigafactories was "overwhelming," going far beyond the bloc's expectations, Virkkunen noted (this bears monitoring)

However, in order for the factories to make a noteworthy addition to Europe's computing capacity, significantly more investment will be required from the private sector to fund the expensive infrastructure. 'Intelligence revolution'The EU describes the facilities as a "one-stop shop" for AI firms

They're int to mirror the cess carried out in industrial factories, which transform raw materials into goods and services (remarkable data)

With an AI factory, raw data goes into the input, and advanced AI ducts are the expected outcome (noteworthy indeed), in light of current trends

It's essentially a data center with additional infrastructure related to how the nology will be adopted, according to Andre Kukhnin, equity re analyst at UBS, in today's market environment. "The idea is to create GPU [graphics cessing units] capacity, so to basically build data centers with GPUs that can train models and run inference

And then to create an infrastructure that allows you to make this accessible to SMEs and parties that would not be able to just go and build their own," Kukhnin said, amid market uncertainty

How the facility will be used is key to its designation as an AI factory, adds Martin Wilkie, re analyst at Citi

On the other hand, "You're creating a platform by having these chips that have insane levels of compute capacity," he said, in today's market environment. "And if you've attached it to a grid that is able to get the power to actually use them to full capacity, then the world is at your feet

You have this enormous ability to do something, but what the success of it is, will be defined by what you use it for (fascinating analysis)

However, "Telecommunications firm Telenor is already exploring possible use cases for such facilities with the launch of its AI factory in Norway in November last year

This analysis suggests that company currently has a small cluster of GPUs up and running, as it looks to test the market before scaling up

However, Telenor's Chief Innovation Officer and Head of the AI Factory Kaaren Hilsen and EVP Infrastructure Jannicke Hilland in front of a Nvidia rack at the firm's AI factoryTelenor"The journey started with a belief — Nvidia had a belief that every country needs to duce its own intelligence," Telenor's Chief Innovation Officer and Head of the AI Factory Kaaren Hilsen told CNBC (remarkable data)

Hilsen stressed that data sovereignty is key. "If you want to use AI to innovate and to make more efficient, then you're potentially putting critical and sensitive information into these AI models," she said (something worth watching), in today's market environment

However, The company is working with BabelSpeak, which Hilsen described as a Norwegian version of ChatGPT

The nology translates sensitive dialogues, such as its pilot with the border police who can't use public translation services because of security issues

We're experiencing an "intelligence revolution" whereby "sovereign AI factories can really help advance society," Hilsen said

Billion-euro investmentsVirkkunen said the region's first AI factory will be operational in coming weeks, with one of the biggest jects launching in Munich, Germany in the first days of September

It's a different story for the gigafactories

Nevertheless, At the same time, "These are very big investments because they are four times more powerful when it comes to computing capacities than the biggest AI factories, and it means billions in investments

Conversely, Each of these need three to five billion [euros] in investment," the commissioner said, adding that the bloc will look to set up a conium of partners and then officially open a call for investment later this year (something worth watching)

Bertin Martens, senior re fellow at Bruegel, questioned why such investments needed to subsidized by government funds

On the other hand, "We don't know yet how much private investment has been posed as a complement to the taxpayer subsidy, and what capacity and how big these factories are

However, This's still very much un at this stage, so it's very hard to say how much this will add in terms of computing capacity," he said

On the other hand, Power consumption is also a key issue

Martens noted that building an AI gigafactory may take one to two years — but building a power generation of that size requires much more time. "If you want to build a state-of-the-art gigafactory with hundreds of thousands of Nvidia chips, you have to count on the power consumption of at least one gigawatt for one of those factories

Whether there's enough space in Europe's electricity grid in all of these countries to create those factories remains to be seen

What the data shows is will require major investment in power regeneration capacity," he told CNBC

Read moreNvidia makes big play for Europe with infrastructure dealsEurope’s battle for power spurs evolution of a new ecosystem for energy-hungry firmsHow Vantage created a new asset class for European investors to gain exposure to cloud and AI data centersUBS forecasts that the current installed global data center capacity of 85 GW will double due to soaring demand

Nevertheless, That could add around 15% to Europe's total capacity — a sizeable boost, even when compared to the U. , which currently owns around a third of global capacity, according to the data

Ing the announcement of the EU-U, in this volatile climate

Trade framework, EU chief Ursula von der Leyen said Sunday that U, in light of current trends

AI chips will help power the bloc's AI gigafactories in a bid to help the States "maintain their nological edge, considering recent developments. ""One could argue that it's relatively easy, vided you have the money

It's relatively easy to buy the chips from Nvidia and to create these hardware factories, but to make it run and to make it economically viable is a completely different question," Martens told CNBC (noteworthy indeed)

On the other hand, He said that the EU will ly have to start at a smaller scale, as the region is unable to immediately build its own frontier models in AI because of their expense. "I think in time, Europe can gradually build up its infrastructure and its models around AI to reach that stage, but that will not happen immediately," Martens said.