European companies capture only a fraction of the value in the bloc's datacenter infrastructure market. Overseas suppliers dominate chips, servers, and cloud infrastructure across Europe.
The Global Electronics Association released a report titled From Chips to Systems: Building an End-to-End EU Strategy for Data Centre, Cloud Infrastructure and AI. According to the document, EU-headquartered companies account for just six percent of the datacenter semiconductor market.
Local firms capture seven percent of server manufacturing and assembly. They hold only eight percent of cloud infrastructure in the region.
The report notes that Europe's Cloud and AI Development Act aims to at least triple datacenter capacity within five to seven years. The association argues that Europe needs policies to develop its own industrial ecosystem.
Foreign regions dominate the electronics supply chain
Europe lags behind other regions in the electronics supply chain. Taiwan dominates contract chip manufacturing and produces most leading-edge processors designed by American companies. South Korean and US suppliers dominate the memory market.
Most major server makers are American, with China's Lenovo as a notable exception. US companies also dominate networking and storage. This leaves Europe with few large suppliers of its own.
The report recommends an end-to-end strategy for the datacenter supply chain. It suggests using European demand to encourage private investment and enticing global technology companies to expand production within the bloc.
Servers drive electronics industry growth
Servers have become the primary growth driver of the electronics industry since 2024, driven by AI processing requirements. Forecasts expect servers to become the largest electronics segment by 2030, ahead of smartphones or automotive electronics.
The report identifies datacenter, cloud, and AI infrastructure as strategically important for EU technological sovereignty. Server farms form critical infrastructure for essential services, and cloud services are integral to manufacturing physical goods.
The association argues that supporting individual parts of the supply chain in isolation will not create a competitive European industry. It calls the Chips Act 2.0 and CADA steps in the right direction, but says other industrial policies must match them.
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The report acknowledges that Europe cannot build this supply chain using EU-headquartered companies alone. It suggests using the attractiveness of the EU market to encourage global leaders to expand local manufacturing.
Policymakers should progressively anchor a greater share of the end-to-end value chain within Europe. The next known step involves deciding whether EU members possess the collective will to pursue this industrial strategy.
