EU Moves to Reduce Reliance on Foreign Tech With Sweeping Sovereignty Package

Key Takeaways

• Technology Dependence Moves to the Center of EU Policy: The European Commission framed reliance on non-EU suppliers for critical digital technologies as a strategic vulnerability, positioning technological sovereignty as a core economic and security objective.
• Chips Act 2.0 Targets Europe's Role in the AI Supply Chain: The proposal aims to expand advanced semiconductor capabilities, support strategic investments, accelerate permitting, and strengthen Europe's position in technologies expected to drive more than 70% of the semiconductor market by 2030.
• EU Seeks Major Expansion of Cloud and AI Infrastructure: The proposed Cloud and AI Development Act aims to triple European data-centre capacity over the next five to seven years while establishing an EU-wide framework for assessing cloud and AI sovereignty.
• Open Source Elevated to Strategic Infrastructure: The Commission plans to invest in open-source technologies, skills, start-ups, cybersecurity, and digital infrastructure while encouraging broader adoption across public administrations to increase choice and resilience.
• Energy and Digital Policy Are Becoming Increasingly Interconnected: A new roadmap seeks to integrate data centres into Europe's energy system, accelerate AI deployment in the energy sector, support smart-grid technologies, and develop sovereign AI models trained on European energy data.

Deep Dive

When European Commission President Ursula von der Leyen unveiled a new package of technology proposals this week, she did not frame it as an industrial policy announcement. She framed it as a matter of control.

"We cannot afford to depend on others for the technologies that keep our hospitals running, our energy grids stable and our services secure," von der Leyen said.

That concern runs through every part of the European Technological Sovereignty Package. The initiative combines new legislation on semiconductors, cloud infrastructure and artificial intelligence with broader plans to expand open-source technologies and integrate the growing digital economy into Europe's energy system.

The immediate goal is to strengthen Europe's position in technologies expected to define economic competitiveness over the coming decade. The larger objective is to reduce what Brussels increasingly sees as a strategic vulnerability: dependence on suppliers outside the European Union for many of the digital systems that underpin modern life.

The package arrives at a moment when AI is reshaping technology priorities across governments and industries. Demand for computing capacity is climbing rapidly. Data centres are becoming strategic infrastructure. Advanced semiconductors have become a geopolitical asset. The question confronting policymakers is no longer simply who develops the best technology. It is who controls the infrastructure behind it.

For the European Commission, the answer cannot remain "someone else."

Chips and the AI Race

The most consequential proposal may be the Chips Act 2.0, which builds on legislation first introduced in 2023 after global semiconductor shortages exposed vulnerabilities in international supply chains. Europe remains strong in certain segments of semiconductor manufacturing, but it continues to rely heavily on other regions for advanced chip production and design. That dependency matters more today than it did three years ago because AI systems are driving demand for increasingly powerful processors.

The Commission noted that AI-related components are expected to account for more than 70% of the semiconductor market by 2030. The new proposal would support investment in advanced semiconductor technologies, accelerate permitting processes, encourage closer cooperation with international partners and create a new excellence label for semiconductor regions.

It also seeks to connect European chipmakers more directly with rapidly expanding customers, including cloud providers, data centers and future AI Gigafactories. The underlying message is that Europe wants a larger role in building the hardware that powers artificial intelligence.

A Push for More Computing Power

If chips are the foundation, computing infrastructure is the next challenge. The proposed Cloud and AI Development Act aims to triple Europe's data-centre capacity over the next five to seven years. The Commission argues that Europe's AI ambitions will be difficult to achieve without significantly more domestic computing resources.

The proposal would support research into advanced and sustainable technologies while simplifying conditions for deploying data centers across member states. It would also establish a single framework for assessing cloud and AI sovereignty across the European Union.

The initiative forms part of the Commission's broader AI Continent Action Plan, which seeks to expand computing infrastructure, data availability, skills and AI adoption across Europe. Officials are attempting to strike a balance that policymakers everywhere are struggling with: how to build more AI infrastructure without abandoning climate commitments. The legislation therefore places significant emphasis on sustainable facilities and energy-efficient development.

Open Source Gets Strategic Status

One of the more unusual aspects of the package is the prominence given to open-source software. Open source has long been part of Europe's technology ecosystem, but the Commission is now treating it as a strategic capability.

According to the Commission, Europe is home to more than three million open-source contributors. The new strategy would expand support for open-source alternatives in cloud computing, AI, cybersecurity, internet technologies and semiconductors. It also includes investments in skills, start-ups and digital infrastructure, alongside efforts to encourage wider adoption throughout public administrations.

The objective is not simply innovation. It is choice. European policymakers have increasingly argued that broader adoption of open-source technologies can reduce dependence on a relatively small number of dominant technology providers while improving interoperability and resilience.

The Energy Question

Every discussion about AI eventually arrives at the same issue: power. As data-centre development accelerates, electricity demand is becoming a larger concern for governments and energy operators. Europe is no exception.

The package's Strategic Roadmap for Digitalisation and AI in the Energy Sector attempts to address both sides of that equation. The roadmap calls for closer coordination between digital and energy infrastructure planning, sustainable integration of data centers into electricity networks and wider deployment of AI across energy systems.

It also supports faster adoption of smart meters, greater cross-border data sharing and the development of sovereign AI models trained on European energy-sector data. The Commission argues that digital technologies can help make energy systems more efficient even as the digital economy itself consumes more power.

A Different Kind of Technology Policy

For much of the past decade, Europe's technology agenda has been associated with regulation. Brussels became known for writing rules governing privacy, competition, cybersecurity and, more recently, artificial intelligence.

This package reflects a different emphasis. The focus is less on regulating technology and more on building it. Whether the proposals ultimately achieve their objectives will depend on negotiations, investment and execution. Both legislative measures must still pass through the European Parliament and the Council of the European Union.

But the direction of travel is becoming much clearer. Europe is increasingly treating semiconductors, cloud infrastructure, AI capacity and digital energy systems not merely as commercial assets, but as strategic capabilities. The technology sovereignty package is the clearest indication yet that Brussels intends to build more of those capabilities at home.

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