Last year, the European Commission presented its plan to catch up in the global race to build artificial intelligence (AI) hubs. Therefore, through leveraging EU funds, it aims to attract 20 billion euro of private money to create so-called “AI gigafactories.” These are AI training hubs stuffed with specialised chips.
A number of companies have expressed interest, but a key challenges here will be to acquire the specialized chips and avoiding protectionist missteps when it comes to global partnerships.
In January 2025, one of the last acts of the Biden administration was to announce to limit the access to certain AI chips for specific EU countries. Not only the restrictions itself surprised many, but also the fact that not all EU member states were treated equally. Poland was for example placed in a second tier of countries that were no longer going to enjoy unlimited access. The Polish government tried to understandwhy but never got a clear answer from the Biden Administration.
But, in May 2025, the Trump administration decided to rescind the Biden-era export controls. This was a positive move, and it was also much to the European Commission’s delight. A spokesperson stated: “We are pleased that the Administration recognizes that the AI Diffusion Rule would undermine U.S. diplomatic relations with dozens of countries by downgrading them to second-tier status.” But it’s early yet and the American experience with chip restrictions for China should give pause for thought in Europe.
U.S. restrictions towards China backfired
In 2022, the Biden administration also implemented a policy to restrict the export of advanced AI chips to China. At the time, many industry experts were already skeptical U.S. export controls could slow China, but Biden went ahead anyway.
But rather than freezing China out, the U.S. protectionist restrictions ended up benefiting the telecoms heavyweight Huawei. Reuters Daily Briefing describes how this Chinese tech “quietly shifted from a telecommunications giant to a chips manufacturer as NVIDIA’s biggest competitor. They have taken on crucial roles in the semiconductor supply chain and have continued plans to ramp up production and technological innovation. The most concerning aspect is China’s progress in open-source models and applications. Instead of faltering without access to American tech, they have adapted with their own technology and now threaten to replace American options.” The Trump administration ultimately reversed past protectionist policy. And recent commentary suggests EU countries are also unwinding from Huawei and shifting to view China as “a systemic rival” on AI.
A grand deal
As is widely known, Trump hasn’t always been particularly in favour of open trade over the last year. But in the Summer of 2025, in a grand deal between Trump and European Commission President Ursula von der Leyen was announced. Part of this deal, entitled the “Framework on an Agreement on Reciprocal, Fair, and Balanced Trade” includes a European pledge to buy American AI chips for 40 billion U.S. dollar.
A closer look reveals that open key questions remain about scale, timing, and certainty of this European commitment. There is no binding mechanism to fund or allocate the $40 billion in chip purchases. Also, supply is not guaranteed due to ongoing regulatory obstacles of exporting U.S.-made chips.
Now, the European Commission must get serious about the chips purchasing commitment made to Trump. It is actually a boon for European AI innovation at a crucial moment. Furthermore, U.S. tech expert Pablo Chavez notes that “the new deal’s security rules could reintroduce a de facto tiering system under another name, with chip export access conditional on site-specific trust designations and data center VEU-style oversight. What looks like Tier 1 unity in headlines may still function like Tier 2 treatment in practice.”
In other words, the threat of American AI restrictions is anything but removed.
Conclusion
Restricting vital elements of the AI supply chain may well easily backfire. If Europe’s fragile supply chain would suffer as a result of EU measures against American chip makers or if the EU struggles to actuate the deal to buy U.S. chips, European AI innovation will suffer.
Europe, like rest of the world, needs U.S. hardware. This tech, which embodies the future of the world’s innovation, is too important to be thrown into regulatory uncertainty by politics Europe and the U.S. need to administer clear strategies and partnerships to turn this deal from headline to reality. The world needs it.
