Europe’s AI supply chain revolution: Barriers, opportunities, and the role of financial institutions

Europe risks falling behind in the global race to build AI infrastructure. Its future will depend not only on chips and data centres, but on mobilising finance to strengthen supply chains and scale capacity

When Mario Draghi delivered a warning about Europe’s technological future in front of the European Commission last September, many listened very carefully — because his message gets to the heart of the AI revolution: Europe’s ability to shape its destiny will depend on how it handles the infrastructure underpinning artificial intelligence.

The stakes have never been higher. Data centres — those unspectacular big cubes filled with racks of blinking servers — are suddenly among the continent’s most strategic assets. They form the backbone of AI, powering everything from language models and quantum computing to digital health, industrial automation, and financial transactions. Europe now faces a crossroads: while global superpowers stage multi-billion-dollar data centre projects, European initiatives too often remain small and scattered, badly affected by fragmented supply chains and policy uncertainty.

Europe’s data centre landscape

In 2025, Europe’s data centre market hit a value of over USD 47 billion, and it is now forecast to double by 2030. AI integration, cloud expansion, and surging digital demand are driving historic investments, especially across the FLAPD metropolitan areas (Frankfurt, London, Amsterdam, Paris, and Dublin).

Yet a stark contrast remains: the average US or Chinese AI data centre project weighs in at USD 20–30 billion, while Europe’s national champions normally target a size of USD 2–3 billion per project. Although it is gaining momentum, the European market also faces stringent regulatory hurdles: sustainability targets, land and power constraints, convoluted permitting, and the ever-present challenge of grid congestion. All these factors create bottlenecks, drive up costs, lengthen delivery timelines and – worst of all – result in data centre clusters too small to make the difference in the AI race.

The supply chain strain

At the core of this issue is the supply chain, meaning the intricate network of hyperscalers, OEMs, distributors, specialised contractors, and financial intermediaries. Building the next generation of data centres is not merely about concrete, steel, and chips. It requires coordinated access to high-tech hardware, advanced AI chips, ultra-efficient cooling solutions, massive renewable energy contracts, and smart financing schemes that cater for growth dynamics never seen before.

The struggle for power procurement is a key hurdle to take. Data centres’ electricity demand in Europe is forecasted to rise from 96 TWh in 2024 to 236 TWh by 2035, soon representing 5.7% of total European consumption.

At the same time, compliance with sustainability and carbon emissions standards remains an imperative: green financing, renewable power PPAs, and circular economy requirements now dictate capital allocations – and demand more sophisticated deal-making.

On top of this, existing power grids are not yet fit for purpose. Future scenarios point to more concentrated electricity consumption in absolute terms, alongside a higher share from fluctuating renewable sources – both of which call for major investments in Europe’s grid infrastructure.

The role of financing institutions

Financial institutions need to step up to the challenge. First, they should embrace the new perspective of data centre projects as interconnected digital platforms. That means moving beyond the simplified project finance models used for real estate or infrastructure deals, extending the scope of analysis to data sources, sovereignty requirements around data, and the revenue model of end users.

A lot more scrutiny needs to go into the possible financing gaps in the chain of GPU procurement and deployment. Without NVIDIA or AMD chips – the most advanced GPUs – it is not possible to keep up the current pace of AI development.

Looking up and down the chain, people may often see no real financing needs at either end: downstream, at least when one of the large hyperscalers (Amazon, Alphabet, Microsoft, Meta, Oracle) is the ultimate buyer of GPUs; or upstream, where the original chip manufacturers enjoy very healthy cash flows.

It is often in the midstream that the financing flows run into a bottleneck. Between the glamorous high-value companies producing and buying AI chips, there is a vast underground network of distributors, deployment servicers, and niche logistics specialists that do the legwork of moving, storing, and installing the GPUs at the right place at the right time. This activity may not grab headlines, but it is no less important – nor is it easy to finance, given that it has normally been carried out by asset-light companies now nearly overwhelmed by a tenfold increase in volume compared to just two years ago.

For this kind of challenge, financial institutions must unpack their full toolbox of working capital instruments: receivables finance, dynamic discounting, inventory finance, and supply chain finance, among others. Everything needs to be optimised for the long lead-times and multi-jurisdictional procurement needs of hyperscale AI builds.

Advanced inventory finance techniques that leverage valuable assets across the AI supply chain (such as GPUs or cooling racks) can be combined with holistic project finance instruments to ensure upcoming billion-dollar data centre projects are not squeezed on liquidity – especially when many of them happen simultaneously and strain the weakest links of the supply chain from multiple directions.

Opportunities: Thinking bigger together

Despite these obstacles, corporate banking and finance institutions are uniquely positioned to unlock Europe’s AI future. There is no shortage of structuring skills or available capital in the European financial sector; the challenge lies mainly in focus and resource allocation.

Collaboration among lenders, Export Credit Agencies, multilateral institutions (e.g., EIB, EBRD), and private equity will be necessary to match the muscle of global superpowers. By leveraging each other’s risk appetites and specialisation in different sections of the value chain and project phases, these diverse actors in the financial sector can support nimble execution, create resilience in the AI value chain, and tackle larger build-up initiatives together.

A call to action

Europe’s ability to compete in the global AI race depends on forging scalable, unified supply chains supported by sophisticated financial tools, moving beyond fragmented national interests and embracing bigger projects, deeper alliances, and bolder financing strategies.

Financial institutions, corporate bankers, and investors – working as true partners with hyperscalers, manufacturers, and logistics leaders – can break bottlenecks, accelerate innovation, and help Europe reclaim its place as a digital champion. All the tools are at hand; the challenge is to tie them together with purpose, urgency, and vision towards a single goal: to act as a positive change agent at the heart of the AI supply chain revolution.