EU Multi-Billion AI Gigafactories Plan Faces Backlash

(MENAFN) A sweeping European Union initiative to invest more than €20 billion ($23.5 billion) in AI “gigafactories” is encountering mounting skepticism ahead of its official rollout, with policymakers and analysts questioning whether sufficient demand exists to justify the масштаб project.

The proposal, first introduced in February 2025 by Ursula von der Leyen, is positioned as Europe’s strategic counterweight to major computing infrastructure efforts in the United States. The plan envisions constructing four to five large-scale AI facilities, with a formal bidding process expected to begin this spring.

Yet, criticism is intensifying within the European Parliament. Sergey Lagodinsky has openly challenged the rationale behind the initiative. “Nobody could explain to me what is the business case they are planning with these gigafactories,” German Greens MEP Sergey Lagodinsky has said.

Lagodinsky added: “I talked to some who are saying: ‘we just need more compute in Europe.’ But then, when I ask them, ‘what for?’ They say ‘it doesn’t matter, we just need more compute.’” Lagodinsky was quoted as saying by Politico.

Questions are also being raised about who would ultimately use such infrastructure. Nicoleta Kyosovska pointed to a lack of clear end users, describing the planned facilities as “cathedrals in the desert.” She emphasized that Europe currently has only one AI firm capable of leveraging such масштаб capacity — the French startup Mistral AI, which is already investing in its own data center infrastructure.

Despite the criticism, a spokesperson for the European Commission defended the initiative, arguing that expanding domestic computing power is essential for technological independence and reducing reliance on foreign providers.

The debate unfolds against a backdrop of growing unease about global AI spending levels. Major tech companies including Alphabet, Amazon, Meta, and Microsoft are collectively expected to invest around $725 billion in AI infrastructure this year.

Some experts warn that such масштаб spending may be unsustainable. Gary Marcus described the trend as the “greatest capital misallocation in history.” Meanwhile, tech analyst Ed Zitron argued that the underlying economics of data centers “do not make sense,” citing widespread unprofitability among AI startups and the prevalence of low-grade credit financing.

Public frustration is also emerging as the global chip shortage worsens, partly fueled by aggressive AI expansion plans. Software engineer Jatin K Malik captured this sentiment, stating: “The reason why RAM has become four times more expensive is that a huge amount of RAM that has not yet been produced was purchased with non-existent money to be installed in GPUs that also have not yet been produced, in order to place them in data centers that have not yet been built, powered by infrastructure that may never appear, to satisfy demand that does not actually exist and to obtain profit that is mathematically impossible,” software engineer Jatin K Malik surmised.

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