REPORT: Closing the European Gap in Data Centre, Cloud, and AI Infrastructure Manufacturing

Today, the Global Electronics Association released From Chips to Systems: Building an End-to-End EU Strategy for Data Centre, Cloud Infrastructure and AI, a joint report with DECISION Études & Conseil. Europe is one of the world's three largest markets for AI data centres. However, most of the value created by that demand accrues to companies and supply chains outside of the EU. This report quantifies that gap, layer by layer, and offers a practical policy roadmap to close it.

"EU-headquartered companies are earning six cents on every euro spent on data centre semiconductors in their own market, seven cents on server manufacturing and assembly, and eight cents on cloud infrastructure. Europe is building the most strategically important electronics vertical, but only capturing a small fraction of the value," said Sanjay Huprikar, Chief Global Officer, Global Electronics Association. "Fixing this gap requires a bold, end-to-end strategy, one that connects chips to systems, demand to manufacturing, and European policy ambition to real industrial outcomes. That means scaling up European companies and leveraging the manufacturing know-how that global leaders bring to production facilities right here in Europe."

Key Data

• DECISION forecasts servers to become the largest electronics segment before 2030, ahead of smartphones or automotive electronics, predominantly driven by demand for AI applications.
• Since 2021, following the COVID-19 pandemic, EU demand for server systems has been growing at an annual rate of 36%, compared with 20% for domestic manufacturing of those systems.
• EU-headquartered companies earn just:
  • Six cents of every euro spent on data centre semiconductors.
  • Seven cents of every euro spent on server manufacturing and assembly.
  • Eight cents of every euro spent on cloud infrastructure in the European market.

Alison James, the Association's Senior Director for European Advocacy, added, "The European Commission's Technological Sovereignty Package, anchored by the Chips Act 2.0 and the proposed Cloud and AI Development Act, can help rectify this imbalance by catalyzing investment in Europe by both European and international manufacturers."

The report lays out the scale of the challenge, and importantly, the economic opportunity if the EU can transform domestic demand for high-performance computing into the EU-built physical infrastructure needed to power the data centre, cloud, and AI revolution.