Europe lacks AI infrastructure, Nokia chief warns. Firms may move to US and China

Europe risks remaining dependent on the United States and China in artificial intelligence. Nokia CEO Justin Hotard warned that European countries lack the infrastructure needed for the rapid development of data centres and AI services. The continent is lagging not only in investment but also in the pace of building energy and digital infrastructure.

According to Hotard, Europe is currently unable to keep pace with the investments technology companies are making in artificial intelligence in the US and China. Major technology companies plan to invest hundreds of billions of dollars in AI-related infrastructure this year – especially data centres, chips and energy systems.

The main problem, he says, is that Europe lacks infrastructure. According to Hotard, it is not enough simply to support the creation of so-called AI gigafactories; sufficient connectivity, transmission capacity and energy infrastructure must also be provided.

"But I think that when you look at the relative pace of investment, I'm not sure it's enough. And it's not just about putting these factories in place. You need connectivity. You need data centre capacity," Hotard said.

The availability of electricity is becoming one of the main constraints on the further development of data centres. According to the European Commission, data centres currently account for approximately 3% of electricity consumption in the European Union, and their energy demand is expected to rise significantly with the advent of generative artificial intelligence.

US companies are raising concerns

Technology companies themselves are already raising concerns about the problem. Amazon said this year that long waits for connection to the electricity grid are complicating the expansion of data centres in Europe. Similar problems are emerging in Ireland, the Netherlands and Germany, for example, where grid operators are facing insufficient transmission infrastructure capacity.

The European Union is meanwhile trying to address the situation by supporting strategic investment in AI and data centres. The plans also include so-called AI gigafactories, which are intended to strengthen Europe's technological capabilities. Critics warn, however, that without faster modernisation of energy infrastructure, these investments may not be enough.

The issue also has wider economic significance. Hotard warns that if Europe cannot build the necessary infrastructure, companies and developers will move their operations to regions with better conditions.

"We've seen it before. If you don't build the infrastructure, businesses and developers will move to where it is," he said.

Energy companies and grid operators are increasingly warning that grid capacity could be one of the main obstacles to the further digitalisation of the economy.