Tech sovereignty is a major issue for Europe amid tensions between the US and China

LONDON – The European Union is investing billions of euros in what it believes to be fundamental technologies and nuclear technologies as part of an effort to strengthen its technological sovereignty and reduce its dependence on the US and China.

The Fraunhofer Institute, a state-sponsored German research firm, defines technical sovereignty as the ability of a state “ to provide the technologies it deems critical for its well-being, competitiveness and agency, and to develop or involve them in economic areas without unilateral structural dependence. “

Europe is currently heavily dependent on technologies coming from beyond its borders, but the continent’s leaders want to change this.

“Strengthening Europe’s digital sovereignty is an important part of our digital strategy,” a spokesman for the European Commission, the executive arm of the European Union, told CNBC. “Europe can play a leading role on the world stage when it comes to technology.”

However, Europe is currently lagging behind when it comes to critical technological infrastructure, such as semiconductors and high-speed telecom networks.

Companies such as Cisco in the US and Huawei in China have installed the plumbing that supports the internet for the more than 700 million inhabitants of Europe. Most of the chips come from manufacturers such as Nvidia, Qualcomm and Intel in the US, Foxconn in China, Samsung in South Korea or TSMC in Taiwan, which China considers a breakaway province. Then there are the US and Chinese internet platforms – think Google, Facebook, Instagram and TikTok – which have hundreds of millions of European users, sharing their personal data with the companies on a phenomenal scale.

“Nations have become concerned that technology allows foreign powers to dominate them in all kinds of ways,” Abishur Prakash, a geopolitical specialist at the Center for Innovating the Future, a Toronto-based consultancy, told CNBC via email. “That’s why governments are looking at technology with a new lens.”

The ongoing geopolitical tensions between the US and China have not gone unnoticed by European leaders.

In recent years, the US has been fighting Huawei, one of China’s most highly regarded technology companies, and urging other countries around the world to boycott it. The US has accused the company headquartered in Shenzhen of having built loopholes into their equipment that could be exploited by the Chinese Communist Party for espionage purposes. Huawei has repeatedly denied the allegations.

Under the Trump administration, Washington blacklisted dozens of other Chinese tech companies last year, including drone maker DJI. Meanwhile, Beijing has been blocking American platforms such as Google, Facebook and Twitter for years.

“In the face of growing tensions between the United States and China, Europe will not be a mere spectator, let alone a battlefield,” Thierry Breton, the European Union’s Internal Market Commissioner, said in a speech last July. . “It’s time to take control of our destiny. This includes identifying and investing in the digital technologies that will support our sovereignty and our industrial future.”

Techanalist Benedict Evans, a former partner at venture firm Andreessen Horrowitz, told CNBC that tech sovereignty in relation to China and the West is interesting and important. “Your supply chain is in an unfriendly country, and both parties are concerned about that,” he said. “Differences between the US, the UK and the EU seem like nothing more than populist hand-waving to me.”

Since Breton speech, Europe has announced plans to invest billions in technologies ranging from semiconductor chips to new telecom infrastructure, with the vision that these technologies can help facilitate developments in others, such as artificial intelligence and autonomous cars.

“Europe’s digital sovereignty rests on three pillars: computing power, control by Europeans over their data and secure connectivity,” said a spokesman for the European Commission. “ To that end, Europe needs to have more capabilities to design and manufacture the world’s most powerful processors, to create innovative European clouds that guarantee data security, and to provide governments, businesses and citizens with access to fast and secure broadband networks. . “

Chips are used to power cars, phones, powerful computers, defense systems and AI, but Europe accounts for less than 10% of global production, up from 6% five years ago. The European Commission wants to boost that figure to 20% and is investigating to invest 20-30 billion euros ($ 24-36 billion) to make this happen.

When it comes to connectivity, the European Commission wants 100% of the European population to have access to download speeds of 1 gigabit per second; average speeds are currently well below 100 megabits per second. It is starting to prepare for 6G and is looking at using satellites to beam the internet across the continent.

Breton and Vice-President of the European Commission, Margrethe Vestager, included the targets on Tuesday in a new “2030 Digital Compass” plan designed to translate the EU’s digital ambitions for 2030 into “concrete terms”.

They also said they want Europe in the next five years to build its first quantum computer – a machine that uses quantum phenomena such as superposition and entanglement to perform computing tasks – over the next five years.

“ As a continent, Europe must ensure that its citizens and businesses have access to a choice of advanced technologies that will make their lives better, safer and even greener – provided they also have the skills to use them. , ”Said Breton in a statement.

“In the post-pandemic world, this is how we will together form a resilient and digitally sovereign Europe,” he added. “This is Europe’s digital decade.”

The European Commission emphasizes that technical sovereignty is not about ‘isolating’ Europe, but more about the region that defends its strategic interests and affirms its values.

“It’s about protecting our businesses from predatory and sometimes politically motivated foreign takeovers,” said Breton. “And it’s about developing the right technology projects that can lead to European alternatives to key strategic technologies.”

Europe has already lost some of its largest and most important technology companies to colossi in the US and China over the past decade. London’s AI lab DeepMind was sold to Google in 2014 for about $ 600 million, while chip designer Arm was sold to Japan’s SoftBank in 2016. SoftBank is now trying to sell Arm to US chip giant Nvidia for a reported $ 40 billion, in a deal that critics say will cut competition.

Elsewhere in Europe, Apple acquired part of Dialog Semiconductor, a German chip company, in a deal worth about $ 600 million, while PayPal bought the Swedish start-up iZettle for $ 2.2 billion.

But Prakash, of the Center for Innovating the Future, said the world will become more divided as nations and nation-states strive for technical sovereignty.

“As more governments use technology to regain control, they will also eventually ‘limit’ their relationship with the rest of the world,” he said, adding that “nations will deal with each other in such a way that the world is fragmented. “