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Instead of sticking to the plan unveiled at the end of May 2025 to jointly build a KI gigafactory, SAP, Deutsche Telekom, Ionos, and the Schwarz Group are now pursuing separate, competing projects to tap into the multi-billion-euro EU funding pool.
TL;DR
- The German consortium of SAP, Deutsche Telekom, Ionos, and the Schwarz Group has abandoned its joint plan for a KI gigafactory.
- Instead, the companies are now pursuing competing individual projects to secure EU funding from a 20-billion-euro fund.
- The EU will support up to five AI data centers with up to 35 percent of costs, which are estimated between three and five billion euros each.
- The deadline for expressions of interest ended on June 20, 2025; SAP is stepping back for now, while Telekom and Ionos are submitting their own proposals.
- Germany’s coalition agreement aims to make the country a leading AI hub with at least one gigafactory.
Europe has been searching for ways to achieve greater digital sovereignty and independence – not just since the new U.S. administration took office. In early February 2025, the European Commission launched the InvestAI initiative, aiming for investments of 200 billion euros. Two months later, it announced plans to invest 20 billion euros in five gigafactories, each equipped with around 100,000 AI chips.
This second initiative prompted leading figures from Germany’s tech sector at the end of May 2025 to apply as a united front for this funding, proposing a large-scale joint AI data center.
At the time, the plan – unveiled at a tech conference in Heilbronn by the newly formed German consortium of SAP, Siemens, Deutsche Telekom, internet provider Ionos, and the Schwarz Group – wasn’t yet fully solidified. And as reports from outlets including Focus and Heise a month later confirm, the joint investment in a “Made in Germany” KI gigafactory is unlikely to happen.
Allies Turn into Rivals
From partners to competitors: Telekom, SAP & Co. are now pursuing their gigafactory plans separately. (Image source: Unsplash / Ian Battaglia)
The companies failed to agree on a unified concept for the application under the EU’s KI gigafactory initiative and are now competing against each other to access the double-digit billion-euro EU funding pool with their own data center projects, according to Focus, citing the specialist service “Tagesspiegel Background Digitalisierung & KI.”
The EU’s original plan is to financially support the construction of up to five data centers dedicated to training large European AI models, covering up to 35 percent of estimated costs, which range between three and five billion euros per facility.
The new German federal government, a coalition of CDU/CSU and SPD, agreed in its coalition treaty to make Germany a leading AI location with at least one gigafactory. The loosely formed consortium of German tech giants thus had political backing – until it quickly fell apart.
The Application Deadline Has Already Passed
The deadline for submitting expressions of interest to receive EU funding for building AI data centers expired on Friday, June 20, 2025. SAP has already signaled it will not participate in a joint project. “We are currently staying outside of the expression of interest process,” said an SAP spokesperson, as quoted by Focus. The company wants to focus primarily on its role as a software provider and sees little need for its own AI factory.
Deutsche Telekom, on the other hand, has expressed willingness to take a leading role in the KI gigafactory initiative and will accordingly “submit an expression of interest,” said a spokesperson for the telecom giant. The company is inviting businesses, technology partners, institutions, and other organizations to join: “We expect the exchange among the various players to intensify.”
Uwe Geier, Head of Cloud Solutions at Ionos, echoed similar sentiments: “We will submit a compelling application with strong partners.” Andreas Weiss, managing director of the Eco association, said it’s “not problematic at first glance if there are multiple expressions of interest.” However, he added, it would be “nonsensical if, in the end, Germany submits competing applications.”
“From partners to competitors: Telekom, SAP & Co.”
Capacity for a European LLM
According to ITB, the gigafactory initiative and its planned large-scale projects could lead, for the first time in Europe, to AI data centers specifically designed to train large language models (LLMs), offering real competition to U.S. hyperscalers. But this depends on whether – and to what extent – the funding promised by the European Commission actually materializes.
Individual member states, including Germany, face tighter fiscal constraints. Still, the German government supports the initiative, aiming not only to lead in AI adoption but also in shaping next-generation AI infrastructure.
When the consortium was unveiled at the end of May, Rolf Schumann, head of the digital division at the Schwarz Group, expressed similar ambitions and hinted at bringing in more companies: “We hope we can bring everyone together, get this done, and pull it off together.”
Frequently Asked Questions
Why did the plan for a joint German KI gigafactory fail?
The companies involved couldn’t agree on a unified concept and are instead pursuing their own competing projects to apply for EU funding.
How much funding is the EU providing for KI gigafactories?
The EU plans to allocate 20 billion euros to build up to five KI gigafactories, with up to 35 percent of each project’s costs covered.
Which companies are submitting individual applications?
Deutsche Telekom and Ionos have submitted their own expressions of interest. SAP is stepping back for now and will focus on its role as a software provider.
Header Image Source: Unsplash / Milad Fakurian
