22SEP

EU ownership rule meets its loophole

3 min read

10:47UTC

EuroHPC's guidance for the €4.12bn AI Gigafactories call keeps an EU-ownership rule but lets Cooperation-Agreement countries, Pax Silica members among them, bypass it.

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Key takeaway

A EuroHPC carve-out lets Pax Silica members bypass the EU-ownership rule on €4.12bn in compute funding.

EuroHPC's published guidance for July's €4.12bn AI Gigafactories call requires the lead builder to be headquartered in the EU, then adds a carve-out: a third country holding an "AI Gigafactory Cooperation Agreement" with the EU can take part without that ownership test. EuroHPC is the EU's joint supercomputing body, and the gigafactories programme funds the large-scale compute the bloc wants to own outright.

the Commission confirmed the €4.12bn call in early June with EU ownership as its headline condition . EuroHPC's own guidance then opened the door that the rule was written to keep shut. Pax Silica membership is exactly the kind of agreement that qualifies, so a US-defined export-control system can reach inside an EU-funded compute programme without anyone touching the regulation. Whoever drafts the agreement terms, rather than the lawmakers who wrote the ownership rule, decides how binding the sovereignty test really is.

Members at the Washington summit are already naming the danger: they flagged Washington's case-by-case sign-off on access to OpenAI's GPT-5.6 as a kill switch over the very models the gigafactories are built to run. European cash and European ownership rules would then sit on top of an American licence to cut the supply off.

Deep Analysis

In plain English

The EU is spending €4.12bn to build giant AI computing centres, called AI Gigafactories, across Europe. The rules say the lead company building each one must be headquartered in the EU, so the money stays in European hands. But the published rules contain an exception: if a country has a special Cooperation Agreement with the EU, its companies can bypass the European headquarters requirement. Pax Silica, the US-run chip alliance that the EU just joined, is exactly the kind of agreement that qualifies. So an American company could lead an EU-funded gigafactory as long as its country is in Pax Silica. And because access to the AI models those gigafactories are built to run requires US case-by-case approval, European money could end up funding computing infrastructure that runs on an American on-off switch.

What could happen next?

Risk
If Pax Silica members win AI Gigafactory contracts under the carve-out, US export-control terms on model access will flow into EU-publicly-funded infrastructure, making the kill-switch concern structurally embedded rather than contingent.
Medium term · Reported
Consequence
The carve-out undermines the EU-ownership signal the Commission intended the July call to send to European compute investors, reducing the policy clarity that would justify domestic capital committing to European AI infrastructure.
Short term · Assessed
Precedent
A Cooperation Agreement carve-out in a major EU funding programme establishes the mechanism by which trade-agreement terms can bypass European ownership requirements in strategic technology without treaty amendment.
Long term · Assessed

Source Landscape

This story draws on neutral-leaning sources

Primary parallel: The WTO Government Procurement Agreement (GPA) requires signatories to open public tenders to foreign bidders above defined thresholds, but permits carve-outs for national security and bilateral reciprocity agreements.

EU member states have repeatedly used reciprocity carve-outs to favour domestic suppliers in defence procurement without amending the GPA itself. EuroHPC's Cooperation Agreement clause replicates this mechanism: a general ownership rule with an agreement-based bypass that the rule's drafters built in but whose specific use cases they did not enumerate.

Counter-parallel: The EU's Chips Act I (2023) contained a 'first-of-a-kind' facility exception that waived European production-capacity requirements for fabs bringing genuinely novel technology to Europe. TSMC cited this exception in its 2023 Chips Act I application, where the Taiwanese foundry's EUV-free 28nm Dresden greenfield site qualified as first-of-a-kind in Europe.

Where the Chips Act exception was published transparently and applied prospectively to a known actor, the EuroHPC Cooperation Agreement carve-out is written generically, creating an open-ended bypass whose beneficiaries are not named.

The €4.12bn AI Gigafactories call is the largest single EU compute-infrastructure commitment ever made. If Pax Silica membership allows US companies to lead consortium bids, the primary economic beneficiaries of that public spend could be US hyperscalers, equipment vendors and model providers rather than European compute startups or system integrators.

The Cooperation Agreement carve-out also affects the programme's leverage value: if EU public money funds compute that runs US models under US export-control terms, the Commission loses the procurement leverage that would otherwise allow it to demand EU-based model hosting, EU data standards or EU audit access as conditions of the contracts it funds.

Consensus view: Researchers at the Science Policy Research Unit (SPRU) at the University of Sussex, who track EU research-funding governance, have documented a recurring pattern in Framework Programme participation rules: ownership or headquarters requirements designed to favour European actors are routinely softened by bilateral Cooperation Agreements that the Commission negotiates with third countries, effectively making the nationality test a default rather than a hard constraint.

The EuroHPC carve-out follows the same mechanism.

Counter-view: The Oxford Internet Institute's Luciano Floridi argues the Cooperation Agreement carve-out serves a legitimate pluralism function: insisting on European-only AI compute would exclude Taiwanese TSMC equipment and Canadian chip-design expertise that currently underpin ESMC Dresden's own build, making pure EU ownership a rule the EU cannot itself satisfy.

The carve-out is not a loophole but an acknowledgement that European compute sovereignty does not yet exist as a self-contained reality.

Key tension: Whether the Cooperation Agreement carve-out, which was written to allow participation by allied-country partners, can be used to embed a US-defined export-control framework inside an EU-funded programme without EU member states having been consulted on that specific consequence.

Sources:Electronics Weekly·EuroHPC Joint Undertaking

Mentions:EuroHPC JU →AI Gigafactories →European Commission →TSMC →Dresden →OpenAI →Washington →ESMC →Pax Silica →

First Reported In

Update #10 · Digital euro to trilogue; Senate bars CBDC

Electronics Weekly· 30 Jun 2026

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Causes and effects

Caused by

EU confirms €4.12bn AI gigafactory call

The Commission's confirmation of the €4.12bn AI Gigafactories call is the instrument that contains the Cooperation-Agreement carve-out now under scrutiny.

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Ten states join US-run Pax Silica

Pax Silica membership is exactly the class of agreement that triggers the EuroHPC Cooperation-Agreement ownership carve-out.

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This Event

EU ownership rule meets its loophole

EuroHPC's Cooperation-Agreement carve-out lets a US-defined export-control system reach inside EU-funded compute without amending the ownership rule.

Different Perspectives

ESMC (TSMC-majority joint venture)

ESMC's president said construction remains on schedule after the Dresden fab's topping-out ceremony on 14 September, reported by Focus Taiwan with first process equipment still targeted for the second half of 2027. No first-party ESMC or TSMC statement independently confirms the claim, and the fab remains 70% TSMC-owned inside a project Europe cites as its semiconductor sovereignty case.

Civo

Civo sold out its Navigate London sovereignty conference on 22 September, drawing about 800 attendees including a sitting MP, a former defence procurement minister and sponsors led by Nokia. Companies House confirms chief executive Mark Boost as Civo's sole person with significant control, British and UK-resident, which answers the ownership question the conference itself is arguing matters.

United States Trade Representative

USTR opened its 2027 National Trade Estimate comment window on 14 September, naming the EU among markets with restrictive technology requirements and inviting submissions on cross-border data rules. The window follows Trump's 24 July Section 301 order into EU digital rules by seven weeks, and unused comments are kept, in USTR's own wording, for future negotiations.

Cohere

Cohere published the deal on 16 September without naming a regulator, running the merged company globally under its own brand from dual Toronto and Berlin headquarters. It pledges the combined company will deliver sovereign AI on STACKIT, the Schwarz Group's German platform, aimed at government buyers weighing that offer against Berlin's own anchor-customer signal.

Germany (Federal Government)

Digital Minister Karsten Wildberger called the Cohere talks "a very strong signal" and signalled Berlin's readiness to become an anchor customer, now its main lever since equity sits with Cohere. The German side secured a co-headquarters and two Cohere C-suite seats, but the protective-rights terms it pressed for in July remain undisclosed.

Poland

Poland leads a self-announced AI Gigafactory consortium with a EUR 100 million phase-one commitment, matched by Czechia and joined by Hungary at EUR 25 million. EuroHPC has confirmed no consortium for the call closing 12 November, so the bloc exists only in national announcements so far.