EU unveils tech sovereignty package to cut reliance on foreign digital suppliers

The European Commission has presented a broad legislative package designed to strengthen the European Union’s technological sovereignty and reduce its dependence on non-EU providers. The focus is on strategic digital technologies such as semiconductors, artificial intelligence and cloud services, where Europe remains heavily reliant on third countries.

The initiative combines updated rules on chip production, a new framework for cloud and AI infrastructure, a strategy for open source software and a plan to accelerate the digitalisation of the energy system.

New package aims to reduce dependence on non-EU technology

The package put forward in Brussels consists of two draft laws – a revised Chips Act (referred to as Chips Act 2.0) and a Cloud and AI Development Act – alongside a new open source software strategy and a roadmap for the digital transformation of the energy sector.

According to the Commission, the EU has strong research capabilities, skilled professionals and a growing ecosystem of start-ups. Yet it remains strongly exposed when it comes to advanced semiconductors, large-scale cloud infrastructure and the most sophisticated AI models. It is estimated that more than 80% of digital products, services and intellectual property used in Europe originate from outside the EU.

The Commission argues that this dependence is particularly risky for critical areas such as hospitals, energy networks and other essential services, and that control over key technologies and data should increasingly lie with entities based in the EU.

Chips Act 2.0: updating EU semiconductor policy

A central pillar of the package is an updated Chips Act intended to modernise the framework adopted in 2023. The first Chips Act has already attracted around €52 billion in investments and led to the creation of approximately 16,000 direct and 30,000 indirect jobs in the semiconductor ecosystem, according to Commission figures.

However, growing demand for chips, especially those used in AI systems, has prompted Brussels to revise the rules. The Commission expects AI-related components to be the main driver of semiconductor market growth and to account for more than 70% of the global chip market by 2030.

The new proposal aims to accelerate permitting procedures, support strategic industrial projects and strengthen the resilience of supply chains. The Commission also wants to stimulate demand for European-made chips through public procurement and by setting up mechanisms that better connect EU chip manufacturers with buyers in sectors such as data centers, automotive and cloud computing.

Cloud and AI Development Act: tripling European computing power

The second key legislative proposal is the Cloud and AI Development Act. Its primary objective is to triple the computing capacity of European data centers over the next five to seven years and create favourable conditions for broader AI deployment across the economy.

To achieve this, the Commission plans measures to expand infrastructure, encourage investment and promote the adoption of AI tools in business and public services. It also wants to introduce a common EU-wide system for assessing the technological sovereignty of cloud services and AI systems. This assessment framework is intended to help public authorities and companies evaluate where services are hosted, who controls them and how data is managed.

Current Commission data suggest that the uptake of AI by EU businesses is roughly comparable to the United States, at around 30%, with some countries such as Sweden achieving even higher adoption rates. The new act is meant to build on this base and push AI into more sectors and use cases.

Boosting open source software across the EU

The package also includes a strategy to expand the role of open source software. The Commission notes that Europe is home to more than 3 million developers involved in open source projects, yet the potential of their work is not fully exploited in key areas.

The new measures aim to increase the use of open source solutions in public administration, cloud computing, cybersecurity and AI. By doing so, Brussels hopes to strengthen transparency, reduce dependence on proprietary systems from non-EU providers and accelerate innovation based on shared code and collaborative development models.

Digital transformation of the energy sector

A further element of the package is a plan to digitalise the EU energy system. Here, the Commission wants to use AI and other digital tools to improve the efficiency of energy networks and better integrate data centers into the power grid.

The proposals include accelerating the rollout of smart meters and enhancing cross-border data exchange on energy flows between member states. Better data and AI-driven optimisation are expected to help balance supply and demand, support the integration of renewables and improve overall system stability.

Why technological sovereignty has become a priority

The Commission links the push for technological sovereignty to the protection of public data and critical infrastructure. It argues that the EU cannot afford to be overly dependent on external suppliers for technologies that underpin essential services such as healthcare, energy and public administration.

Commission President Ursula von der Leyen has stressed that Europe must retain control over technologies that keep hospitals running, maintain the stability of power grids and underpin the security of key services. The new package is intended to shift more of that control back within the EU’s borders.

Next steps and plans for AI gigafactories

The legislative proposals presented by the Commission will now be negotiated with the European Parliament and the Council of the EU. Only after agreement between the institutions will the new rules come into force.

In addition, the Commission announced that it plans to launch a call for proposals in July for the construction of so‑called AI gigafactories – large-scale facilities dedicated to AI infrastructure. These projects are expected to play a role in expanding Europe’s computing capabilities and supporting the objectives set out in the new tech sovereignty package.