In the six critical layers of the AI revolution, Europe is absent in key areas. It produces no critical minerals and depends almost entirely on China. It has no major high-bandwidth memory or logic chip champions.  

But at the two layers that determine whether AI infrastructure can actually function at scale — energy systems and connectivity — Europe does not just participate in the global AI economy. It is irreplaceable.

American hyperscalers looking to build gigawatt-scale data centers depend on European engineering for the power distribution networks. These are the turbines, transformers, and switchgear sold by European companies such as Siemens, ABB, and Schneider Electric.

Every connection between data centers and every undersea link carrying traffic between continents depends on European cable manufacturing and installation expertise. European companies Prysmian, Nexans, and NKT account for 65% of the global submarine cable market. 

This is the essential plumbing of the AI age — one we can choose to embrace or ignore at our peril: American capital needs European infrastructure. No path to AI leadership runs around Europe. There is only a path that runs through it. If Europe and America fail to act together, the danger is clear: China will dominate the market for AI services.

For Europe, the greatest strategic error would be pursuing comprehensive “digital sovereignty” — trying to replicate the entire AI stack in a homegrown “EuroStack.” This quest would be economically unviable and strategically counterproductive. But Europe should pursue “selective sovereignty” — by identifying the two or three layers of the AI stack where it has natural advantages and making itself essential within them.

Deepening European dominance in energy infrastructure and cable connectivity would help rebuild a transatlantic tech partnership, while providing Europe with disproportionate influence in global technology governance. In this way, Europe may even succeed in reestablishing the “Brussels Effect” — not through regulatory constraint, as many Americans disfavor, but by becoming an indispensable partner in building a shared future for AI and digital services.

Europe has both engineering excellence and manufacturing capacity. What it lacks is grid infrastructure, regulatory velocity, and speedy deployments to convert these advantages into a sustained position of indispensability.

Europe must accelerate. The pace of European decision-making on digital infrastructure is too slow. Siemens Energy has reported a $160 billion backlog, with some turbine frames sold out for seven years, while transformer lead times now exceed two years. These bottlenecks will not resolve themselves; they will require aggressive expansion in capacity and regulatory reform to prioritize speedy deployment.

Europe should invest in three areas: energy generation capacity, grid-scale storage, and transmission infrastructure. The AI revolution is about energy. The regions that can deliver reliable, cost-effective power at a massive scale will host the computational infrastructure of the future, while those that cannot will find themselves dependent on AI services hosted elsewhere.

We should also ask honestly: If regulatory requirements make Europe commercially unviable for American AI platforms, who will fill the vacuum? Is it truly “European alternatives built on European values” — or will it be Chinese platforms, operating under very different rules?

Let me address the current American political moment. Even amid rising perceptions in Europe of American unreliability, turning to China for a technology partnership would represent a catastrophic mistake. 

Chinese technology partnerships come with political dependencies. We have seen this playbook before in telecommunications, in ports, and in electric grids. Each time Beijing entered a market, it deployed the might of the state to gain commercial advantage, established vendor lock-in, and exploited its leverage through political coercion.

Beijing is watching tensions in the transatlantic alliance with great interest and is looking for opportunities to displace both American and European suppliers.

The correct response to American unreliability is not geopolitical diversification. The correct response is European acceleration. Europe’s position in the global tech landscape is stronger than the prevailing narrative suggests. Europeans have the engineering capability and the manufacturing capacity. What Europe needs is an operational environment that allows its structural advantages in energy and connectivity to translate into market dominance.

The next decade will determine whether the transatlantic partnership remains the organizing principle of the democratic world or becomes a historical artifact. Technology is not peripheral to answering that question. The choices we make now about energy infrastructure, grid capacity, regulatory frameworks, and investment priorities will reverberate for generations.

Together, we can build a future where European capabilities and American capital create shared prosperity and shared security. Or we can build a future where Chinese overcapacity fragments the democratic world into competing digital spheres. 

Which way will Europe go?

Ryan Fedasiuk is a fellow at the American Enterprise Institute, where he focuses on US-China relations, technology, and national power. 

Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions expressed on Bandwidth are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.

The post Europe Dominates AI’s Plumbing appeared first on CEPA.