China and Europe ramp up sovereign tech initiatives

Policy makers in Europe and China are tightening the relationship between sovereign technology infrastructure investment and economic security.

In China, the country’s communication service providers are set to play a central role. China's Ministry of Industry and Information Technology this week, for example, released a three-year plan to drive “significant breakthroughs” in the integration of artificial intelligence (AI) with the country's information and communications networks, according to the Chinese news agency Xinhua.

And many publications have picked up on Bloomberg’s report that China is planning to invest $295bn in developing a network of AI infrastructure hubs, operated principally by telecom operators, with local technology companies providing the necessary building blocks, including chips.

As Telecom TV points out, Bloomberg’s report follows news from Xinhua of China’s “Six Networks” investment, which covers water, computing power, next-generation communications, urban underground pipeline and logistics networks as well as power grids. The Chinese news agency says investment related to the six networks is “provisionally estimated to exceed 7 trillion yuan (about 1.02 trillion U.S. dollars) this year alone.” One of the initial projects it cites is China Mobile’s construction of a 1-billion-yuan intelligent computing center project, designed to house over 1,000 high-performance computing servers.

Regional tech ecosystems

The European Commission’s tech sovereignty package unveiled earlier this month focuses on building technological capacity across semiconductors, cloud infrastructure, artificial intelligence and digital services. Lacking big financial and technology deployment figures, the proposal looks modest compared to that of China, or the levels of AI investment in the US.

Nonetheless, its focus on building domestic, interconnected digital services to protect the region against future geopolitical risks reflects an ongoing shift. Other EC initiatives include the funding of the construction of several AI gigafactories. Announced by the Commision in February 2025, the AI Gigafactory project will receive EUR 20 billion in funding in what the EC describes as “the largest public-private partnership in the world for the development of trustworthy AI”.

Like China, the European Commission wants to spur the development of a regional ecosystem that brings together semiconductor demand and production, cloud infrastructure, and AI deployment and consumption. Its aim is to strengthen Europe’s technological competitiveness, resilience and sovereignty.

One element of the Commission’s Tech Sovereignty package of specific interest to communications service providers is its Cloud and AI Development Act, which seeks to boost regional computing capacity and investment in AI infrastructure, reduce dependence on non-European cloud companies and drive faster adoption of AI. Ambitions include a tripling of Europe's data center capacity.

Telefónica pointed out in a statement last year about Europe's digital sovereignty proposals that "few industries will feel the impact of these policies as directly as telecommunications. As Europe’s digital backbone, telcos manage vast data flows, high-performance networks, and critical infrastructure — all of which AI has the potential to transform." The Tech Sovereignty package is not final, however, and still needs to wend its way through the Council of the European Union and the European Parliament.

European telcos eye gigafactories

In the meantime, the European Commission says it expects this summer to advance in its plans to award funds for AI Gigafactories, with the aim of beginning construction of the first European Gigafactory in 2027. An informal call for expression of interest produced 77 proposals to set up AIGFs in 16 Member States across 60 different sites, according to the Commission.

Telecom operators are among the interested parties. In France, for example, Orange has teamed up with its competitor in the telco space, the Iliad Group, as well as Ardian, Artefact, Bull, Capgemini, the EDF group, and Scaleway to bid for funding of a French Gigafactory under the initiative.

Telefónica has also expressed enthusiasm, describing AI and AI Gigafactory initiatives as "vital enablers for the telecom sector. AI Factories will provide the resources needed for applications such as network optimization, predictive maintenance, cybersecurity, and hyper-personalized customer services."