• Deutsche Telekom is on course to form a consortium to bid for EU funding to build an AI Gigafactory
• Interested parties have until 20 June to submit expressions of interest to the European Commission
• Deutsche Telekom executive says the “window of opportunity… is now or never”

Deutsche Telekom (DT) is keen to take a central role in Europe’s efforts to build a number of massive datacentres that would help underpin the delivery of sovereign AI services, with the aim of reducing the continent’s reliance on large US hyperscalers for AI, cloud and data services. 

The German telco is apparently forming a consortium with web hosting firm Ionos, software giant SAP and the Schwarz Group, a large retail firm, to apply for a slice of €20bn in European Commission (EC) funding to build one of up to five so-called AI Gigafactories — large-scale facilities equipped with approximately 100,000 state-of-the-art AI chips, four times more than current AI factories.

Reports of the nascent collaboration first emerged during Handelsblatt’s inaugural Technology Experience Convention Heilbronn (TECH) event, when managers indicated that the quartet is engaging in intensive discussions on how to approach such a mammoth project.

So far, little is being divulged since companies and organisations have until 20 June to submit expressions of interest in establishing a gigafactory to the European Commission (EC). 

However, DT has at least made its intentions clear. Christine Knackfuss-Nikolic, chief technology officer at DT’s enterprise services unit T-Systems, told TelecomTV that the operator is “ready to take a leading role in the AI Gigafactory initiative and invest in sovereign infrastructures”.

Echoing other telcos and vendors, Knackfuss-Nikolic insisted that sovereign AI is indispensable for Germany and Europe, and suggested that time is now running out for the region to make its move.

“The window of opportunity, to create our own independent infrastructures for this, is now or never. That’s why, just like Ionos, SAP and the Schwarz Group, Deutsche Telekom is committed to building sovereign cloud and AI infrastructures in Germany and Europe and this with over 20 years of experience. Rarely before have the signs and the common will in Europe been as strong as they are today. We must seize this historic opportunity with determination,” she declared. 

Notably, DT is already part of the 8ra initiative that forms part of the Important Projects of Common European Interest (IPCEI). Here, the goal is to create a “multi-provider cloud-edge continuum”, or a “connected, sovereign digital infrastructure for Europe, by Europe”. 

As previously noted by Knackfuss-Nikolic, Europe’s goal by 2030 is for 10,000 connected edge-cloud nodes to be deployed in the region. “In the future, this could grow to 100,000 datacentres across Europe,” she said. 

AI spending spree

The EC set out its ambition to build a “network” of AI factories – 13 of which are already being deployed – and construct AI Gigafactories in its AI Continent Action Plan in April.

At the time, the EU’s executive body issued a call for expression of interest for consortia interested in developing such facilities, noting that €20bn of EC funding will be made available through the new InvestAI initiative to those prepared to pump private funds into the gigafactory developments. In total InvestAI aims to “mobilise €200bn for investment in AI”. 

Overall, the EC’s aim is to at least triple the EU’s datacentre capacity during the course of the next five to seven years, with “highly sustainable datacentres” as the priority. The hope is that the plan will “transform Europe’s strong traditional industries and its exceptional talent pool into powerful engines of AI innovation and acceleration”. 

It remains to be seen whether or not the EC – renowned for dragging its feet and taking forever to actually get anything done – will be able to act quickly enough, as is clearly feared by Knackfuss-Nikolic and others. 

Meanwhile, telcos and vendors in Europe have been building their own AI factories, including those developed by Swisscom (in Switzerland) and Telenor (in Norway), although neither of those countries are EU member states. However, the AI factory set up by Swisscom subsidiary Fastweb (now part of Fastweb + Vodafone) in Italy is in the EU and already being used to develop an Italian large language model (LLM).

In addition, Ericsson is one of the members of a Swedish consortium, along with AstraZeneca, SAAB, SEB and Wallenberg Investments AB, that is to use Nvidia technology to build an AI factory “that will be operated by a joint company to offer secure, sovereign compute access to the industry partners”.

“The consortium aims to drive new AI innovation in Sweden through knowledge sharing and boosting AI competence within industry,” noted Ericsson in an announcement this week.

- Anne Morris, Contributing Editor, TelecomTV