Nvidia and Deutsche Telekom to build $1.2 billion AI-focused data center in Munich.

Nvidia and Deutsche Telekom are collaborating to build a $1.2 billion AI data center as Europe is investing heavily in its AI sector to reduce reliance on U.S. and Chinese technology.

Although the planned data center build is smaller than comparable U.S. projects, it is still an important step toward Europe’s AI independence, with the potential to lead to further investments across the region.

Nvidia commits as Europe attempts to build AI infrastructure

Nvidia Corp. and Deutsche Telekom AG are preparing to reveal their plans for a €1 billion, about $1.2 billion, data center in Munich, Germany. SAP SE, Europe’s largest software company, has been teased as one of its first major customers.

The announcement will likely come some time next month in Berlin by Deutsche Telekom Chief Executive Officer Tim Höttges, Nvidia CEO Jensen Huang, SAP CEO Christian Klein, and German Digital Minister Karsten Wildberger.

The new data center will expand Europe’s computing power as the region attempts to address concerns of falling behind American and Chinese tech firms, which are already ahead in pouring vast resources into AI infrastructure.

In the United States, Microsoft Corp. and Google’s parent Alphabet Inc. have committed hundreds of billions of dollars to build AI-focused data centers. These massive projects are designed to handle the energy-hungry demands of training and running generative AI models.

Even though the Nvidia and Deutsche Telekom data center isn’t as big as some in the U.S., it shows that Europe wants to build its own AI systems and store its own data, instead of depending on foreign tech companies. It also helps make sure European data stays safe and follows the region’s strict privacy laws.

Europe’s catch-up strategy

The Munich project is expected to use around 10,000 of Nvidia’s most advanced graphics processing units (GPUs), which are the backbone of modern AI systems. That number is small compared with projects like the data center under construction in Texas by SoftBank Group Corp., OpenAI, and Oracle Corp., which is reportedly expected to house about 500,000 GPUs. This is 50 times more than the planned German site.

Still, the collaboration is a major milestone for Europe’s AI ambitions. Nvidia CEO Jensen Huang has recently urged Europe to invest more in its own computing technology. He warned that without more investment, European companies might rely too much on U.S. tech firms and lose control of their data and innovation.

In February, the European Union announced a $233 billion plan to support AI development across the bloc. The initiative aims to triple Europe’s computing capacity over the next five to seven years and promote the creation of so-called AI “gigafactories” which are large, energy-efficient facilities dedicated to processing and training AI models.

However, while several companies, including Deutsche Telekom, have held talks about joining the EU’s AI expansion program, the bloc has yet to finalize how it will evaluate proposals or distribute funding. The confusion has made companies delay investments and slowed down important projects.

Deutsche Telekom’s American depositary receipts rose as much as 2.2% following news of the partnership, reaching a session high.

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