Europe is aggressively scaling its digital and industrial infrastructure to reduce reliance on external powers, implementing a €175 billion Horizon Europe 2028-2034 programme alongside the June 2026 European Technological Sovereignty Package. BNP Paribas AM portfolio managers Lazare Hounhouayenou, Mathieu Jourde, and Ulrik Fugmann reported that these structural shifts aim to secure regional autonomy across AI, semiconductors, and cloud computing.
The June 2026 Technological Sovereignty Package and Semiconductor Overhaul
The European Commission formally adopted the European Technological Sovereignty Package in June 2026, aiming to raise the bloc’s digital autonomy, competitiveness, and overall resilience. This legislative framework directly targets semiconductors through the Chips Act 2.0. The initiative intends to bolster Europe’s domestic semiconductor manufacturing industry and cut deep-seated dependencies on external nations. By 2030, analysts project the global semiconductor market to reach €1.37 trillion. European companies already hold crucial positions in this global supply chain—most notably supplying advanced lithography equipment vital for semiconductor fabrication—yet the new framework pushes for independent domestic production capabilities.
Parallel to the semiconductor push, the Cloud and AI Development Act addresses surging enterprise demand for local data centres, scalable cloud environments, and raw computing capacity. Under this specific act, the EU targets at least tripling its existing data centre capacity within the next five to seven years. Meanwhile, the 2025 AI Continent Action Plan seeks to position Europe as a global leader in artificial intelligence. This is backed by InvestAI, a dedicated initiative designed to mobilise €200 billion for AI investments, which includes a targeted €20 billion fund specifically earmarked for building advanced AI gigafactories.
Securing Critical Raw Materials Amid Geopolitical Pressures
Hardware manufacturing and digital infrastructure expansion require a stable supply of underlying physical resources. Europe remains heavily reliant on external imports for critical raw materials, leaving its digital, automotive, defence, and aerospace sectors vulnerable to escalating geopolitical tensions. The 2024 Critical Raw Materials Act confronts this structural vulnerability head-on by aiming to expand internal EU capacity and drive supply chain sustainability.
Execution of this raw materials strategy requires a dual approach. The bloc is forging new international trade partnerships while simultaneously enforcing a decisive shift toward domestic localisation for essential resources like lithium mining. These targeted material supply chains feed directly into smart factories, clean energy deployment, and large-scale reshoring initiatives across both public and private sectors.
Energy Independence and Defense Modernization Through Advanced Technology
Infrastructure development in Europe extends far past pure software and silicon, deeply intertwining with clean energy transitions and national security. The Strategic Roadmap for Digitalisation and AI in Energy focuses on electricity grid optimisation, systematic energy efficiency, and accelerated decarbonisation. This roadmap intends to increase power grid resilience, lower operating costs for both businesses and consumers, and drastically reduce reliance on foreign fossil fuels.
Concurrently, European military strategies increasingly rely on cutting-edge technology. Artificial intelligence and advanced cyber defence systems have become core components of national security. To deter threats without leaning on foreign allies for operational support, Europe is channeling capital expenditure into defence technology through the broader framework of the Horizon Europe 2028-2034 programme. This €175 billion funding vehicle targets multiple technologies simultaneously, encompassing smart energy grids, clean aviation, rigorous cybersecurity frameworks, and next-generation artificial intelligence deployment.
