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EU unveils full-stack sovereignty package to build Euro tech muscle
European Commission launches package spanning chips, cloud and energy to reduce dependency on US and Chinese supply chains and to foster a sovereign vertical domestic stack
The European Commission (EC) has unveiled a European Technological Sovereignty Package designed to secure the continent’s future capacity in cloud, artificial intelligence (AI), open source and semiconductors as well as use artificial intelligence (AI) to build efficiencies in energy supply. The package aims to build a self-reliant digital stack that can help Europe to move away from tech dependency and build economic security.
Commission president Ursula von der Leyen, said: “We cannot afford to depend on others for the technologies that keep our hospitals running, our energy grids stable and our services secure. This is about protecting our citizens, defending our interests and making our own choices.”
The package consists of two major legislative proposals and two strategic frameworks:
Legislative proposals are:
- Cloud and AI Development Act: A new proposal intended to triple Europe’s datacentre capacity over the next five to seven years and strengthen European cloud and AI ecosystems.
- Chips Act 2.0: A revision of the original 2023 Chips Act, designed to further reduce strategic dependencies and boost capacity in cutting-edge semiconductor technologies.
Strategic frameworks are:
- Open Source Strategy: A new strategy to promote open and interoperable digital ecosystems within public administrations and across the European Union (EU).
- Strategic Roadmap for Digitalisation and AI in the Energy Sector: A plan to encourage the integration of AI and digital solutions into electricity infrastructure.
Cloud and AI: Tackle dependence
The Cloud and AI Development Act (CADA) aims to bolster the EU’s technological sovereignty and digital competitiveness. It aims to tackle slow permitting processes, boost access to energy and financing, and tackle an over-reliance on non-EU service providers.
The act focuses on three pillars. These include boosting research and innovation in next-generation AI technologies, tripling Europe’s datacentre capacity by 2035 and strengthening digital autonomy.
Central to these are the introduction of an EU-wide sovereignty framework that includes a common procurement system for public administrations and the promotion of open source solutions to enhance supply chain resilience.
CADA also establishes a four-level sovereignty assessment framework for public sector bodies that aim to help them evaluate risk. These range from local infrastructure processing to rigorous requirements regarding ownership, software supply chain transparency and protection against third-country interference.
Chips Act aims to cultivate demand
The Chips Act 2.0 aims to repeal and replace the 2023 Chips Act and addresses structural dependencies on third countries – where the EU currently produces less than 10% of global semiconductors – and tackle the risk of supply disruptions.
The initial Chips Act had a supply-driven focus but this adds the intention to cultivate demand to ensure the industrial viability of European semiconductor production. The revised framework introduces several key mechanisms to increase competitiveness and ensure security of supply. These include the Chips for Europe Initiative 2.0, which incorporates “grand challenges” to foster large-scale industrial deployment, and the establishment of a Business-to-Business Semiconductor Supply Chain Platform designed to provide a digital model of the supply chain to better anticipate and manage disruptions.
The proposal seeks to overcome barriers identified in the evaluation of the 2023 Chips Act, such as long permitting timelines and insufficient scale-up capital. Currently, permitting for advanced semiconductor facilities in the EU takes, on average, 7.5 months longer than in competing jurisdictions. To mitigate this, the Chips Act introduces fast-track permitting procedures and a European Semiconductor Region of Excellence label to attract investment to high-potential areas.
Open source ecosystem
The EU Open Source Strategy aims to reduce dependence on non-EU tech by fostering an open-source ecosystem.
Key measures include prioritising open source funding in critical sectors such as semiconductors, AI and cyber security; promoting open source solutions within the EU Digital Identity ecosystem, such as the EUDI and European Business Wallets; and scaling the Open Internet Stack to provide a catalogue of solutions aligned with EU priorities and rules.
The strategy mandates public administrations to act as anchor users by adopting open source friendly procurement guidelines and embedding sovereignty-by-design into digital investments. It also proposes establishment of an Open Source Maintenance Instrument for dependency mapping and security monitoring, plus investment in workforce skills to support developer mobility and technical proficiency.
Digitise the energy supply system
The Commission’s Strategic Roadmap for Digitalisation and Artificial Intelligence (AI) in energy aims to strengthen the EU’s energy autonomy and protect it from vulnerabilities caused by rising prices and geopolitical instability.
By integrating digital solutions into the energy sector, the European Commission wants to create a cleaner, more competitive and secure system that reduces costs for households and businesses.
The roadmap points to the potential for demand-side flexibility to lower electricity consumption costs for EU consumers by more than €71bn annually, a 64% reduction.
Meanwhile, AI-based operations and maintenance optimisation is projected to save the industry up to €94bn annually by 2035. It also believes digital integration in real-time grid control can help the EU scale up reliance on renewable energy sources.
The strategy cites three core pillars: ensuring datacentres are integrated into the energy system sustainably via tripartite agreements, accelerating the roll-out of smart meters and grid-enhancing technologies, and creating a framework for secure and cross-border data sharing.
Digital sovereignty fund
Finally, the package also includes a proposal for a Digital Sovereignty Fund to provide equity and grants to European tech firms that are building critical components of the sovereign stack. It focuses on deep-tech areas where private capital is often scarce, such as quantum computing, photonics and advanced materials.
The legislative proposals included in the package – the Chips Act 2.0 and the Cloud and AI Development Act – must be passed by the European Parliament and the Council of the European Union before they can enter into force.
Read more about data sovereignty
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- The rise of the splinternet? Data sovereignty risks and responses. We look at the political, legal and economic risks around data sovereignty, the fears for digital dependency and massive hyperscaler penetration in the UK public sector.
- Breaking the stranglehold: Responses to data sovereignty risk. We look at the political and government responses to risks around data sovereignty and massive dependence on the three US hyperscalers – AWS, Azure and GCP – in the UK and Europe.
