Strengthening Europe's Tech Sovereignty

On June 3, 2026, the European Commission unveiled its most ambitious technology policy package to date: the European Technological Sovereignty Package. It signals a major shift in the EU's approach to technology from regulating digital markets to actively building European capacity in semiconductors, artificial intelligence, and cloud computing.

The package comes at a moment of acute vulnerability. Europe currently relies on non-EU countries for over 80% of key digital products, services, infrastructure, and intellectual property. European businesses spend an estimated €264 billion annually on US software and cloud services, accounting for the bulk of their digital expenditure. In cloud computing, Amazon AWS, Microsoft Azure, and Google Cloud dominate the market. In generative AI, US firms hold a commanding lead. In semiconductors, Europe depends heavily on Asian supply chains. The package is designed to reduce structural dependencies and ensure that Europe can develop, deploy, and secure the technologies its citizens rely on.

The Four Pillars of the Package

1. Securing the Semiconductor Base: Chips Act 2.0

Europe's first Chips Act, introduced in 2023, was a response to critical vulnerabilities in the global semiconductor supply chain exposed during the pandemic. But the EU still relies heavily on third countries for advanced production and chip design. With AI-related components expected to make up over 70% of the semiconductor market by 2030, the stakes could not be higher.

Chips Act 2.0 aims to build capacity in cutting-edge semiconductor technologies that power AI applications. It will speed up permitting, deepen cooperation with like-minded partners, and introduce a new excellence label for Europe's semiconductor regions. The act also adopts an ecosystem approach, bringing European chipmakers closer to their customers in growth sectors such as data centres, cloud providers, and AI Gigafactories. The EU's long-standing goal of capturing 20% of the global semiconductor market by 2030 has been given new urgency.

2. Cloud and AI Development Act

The proposed Cloud and AI Development Act (CADA) is a central part of the Commission's AI Continent Action Plan. It aims to triple data centre capacity in Europe over the next five to seven years. This is essential for keeping pace with the AI boom, which is driving rapid growth in demand for cloud computing services.

The act will support research and innovation in cutting-edge, sustainable technologies while balancing AI ambitions with climate commitments. It will streamline conditions for deploying data centres across the EU, with a focus on highly sustainable and innovative facilities. Crucially, it will introduce a single EU-wide framework to assess cloud and AI sovereignty, helping protect critical applications and sensitive data while keeping most of the EU market open to like-minded partners.

3. Open Source Strategy

Europe is home to over three million open-source contributors, making it a global leader in this space. The Open Source Strategy seeks to build on this strength and deliver more sovereign digital solutions. It will scale up open source alternatives in priority areas such as cloud, AI, cybersecurity, and semiconductors, and support greater use of open source in public administrations. The strategy also aims to invest in skills, support open-source start-ups, and improve the long-term maintenance and security of Europe's open-source digital infrastructure.

4. Strategic Roadmap for Digitalisation and AI in the Energy Sector

The energy crisis has made the digitalisation of Europe's energy system more urgent than ever. The roadmap addresses both the integration of digital infrastructure into Europe's energy system and the use of AI to make energy systems more efficient. It will ensure that data centres are integrated into the grid sustainably and transparently, accelerate the deployment of smart meters, and help build sovereign and secure AI models for the energy sector, trained on European data.

Why Now? The Geopolitical Catalyst

The timing of the package is no accident. Europe's fears of being locked out of critical technologies have crystallised over the past year. The perception that digital services can be "weaponized" against Europeans has grown, exemplified by the Trump administration's targeting of the International Criminal Court's top prosecutor, which led to Microsoft cancelling his email account. The possibility of a "kill switch" hidden in US technology has become a recurring concern.

Commission President Ursula von der Leyen framed the stakes clearly: "We cannot afford to depend on others for the technologies that keep our hospitals running, our energy grids stable, and our services secure. This is about protecting our citizens, defending our interests, and making our own choices. Europe has the talent, the research excellence, the industrial base, and the Single Market. Together, we must turn these strengths into technological sovereignty".

Henna Virkkunen, the executive vice-president for tech sovereignty, security, and democracy, echoed this sentiment: "Europe wants to be in the position to make its own choices, avoiding risky dependencies on single dominant suppliers, one company or one third country".

Industry Pushback and the Limits of Sovereignty

The package has drawn criticism from industry groups. DIGITALEUROPE, the European digital industry association, warned that the semiconductor value chain is inherently global. "There is no such thing as a 'European chip'." It cautioned that local content requirements are unworkable and would fragment supply chains, undermining EU competitiveness. Some economists and analysts also point out that Europe's challenge is not just technological dependence but a lack of a vibrant innovation ecosystem, deep capital markets, and a culture of risk-taking. The fragmentation of Europe's capital markets remains a significant barrier.

The European Technological Sovereignty Package marks a decisive shift from regulating existing markets to building new industrial capacity. It addresses genuine vulnerabilities in chips, cloud, and AI, but faces significant hurdles in industry resistance, fragmented capital markets, and high energy costs. The legislative proposals must now be debated by the European Parliament and Council, and their final shape remains uncertain. The effectiveness of the package will depend not only on legislation but also on Europe's ability to mobilise capital, attract talent, and navigate the tension between openness and autonomy in an increasingly fragmented global technology landscape.