German Tech Giants Join Forces to Build Massive AI ‘Gigafactory’
Europe’s push for technological independence is hitting the accelerator, with major German corporations stepping up to build the infrastructure needed for the next generation of artificial intelligence. According to reports from the German newspaper *Handelsblatt*, telecommunications giant Deutsche Telekom and the retail powerhouse Schwarz Group are planning to jointly construct an AI “gigafactory.”
The term “AI gigafactory” refers to a massive data center specifically designed to handle the extraordinary computing power required to train the world’s most sophisticated AI models. This collaborative effort is part of a wider consortium of German companies, including software titan SAP and web-host Ionos, all vying for a share of a proposed €20 billion fund from the European Union dedicated to building these AI hubs across the bloc.
The goal is clear: strengthen Europe’s “digital sovereignty” and reduce reliance on hyperscale cloud providers from the United States and China.
The Grocery Chain’s Colossal Investment
While the joint bid with Deutsche Telekom captures headlines, the Schwarz Group, which owns the ubiquitous supermarket chains Lidl and Kaufland, is already moving ahead with a breathtaking solo project that underscores the urgency of this digital race. The group is investing a colossal eleven billion euros in a new AI data center in Lübbenau, located in the German state of Brandenburg. This investment represents the largest single financial outlay in the company’s entire history.
Dubbed the Schwarz Digits Data Center, the facility is being developed by the group’s digital subsidiary, STACKIT. The plans are staggering: the site is designed to house up to 100,000 specialized AI chips, also known as Graphics Processing Units or GPUs. To put that capacity into perspective, it is ten times the 10,000 GPUs planned for a separate AI data center project Deutsche Telekom is currently building with Nvidia in Munich.
The ‘European AWS’ Ambition
The first phase of the Lübbenau project is slated for completion by the end of 2027. Crucially, this massive new infrastructure isn’t just for checking inventory at Lidl and Kaufland. The Schwarz Group intends to follow a strategy similar to that of Amazon, which first built its own infrastructure for e-commerce and then began offering it to outside clients as Amazon Web Services (AWS). Schwarz Digits plans to offer its powerful new IT infrastructure to external enterprise customers, positioning itself as a serious new competitor in the European cloud market.
The project also boasts impressive sustainability credentials. The facility will be powered by renewable energy, and its massive amounts of waste heat will be routed back into the regional energy supplier’s district heating network, allowing for efficient use of resources. As Germany’s Digital Minister has noted, such investments are crucial for the country’s competitiveness, and Europe is now pouring billions into AI infrastructure in a high-stakes effort to catch up with global rivals.
The news of the joint planning between Deutsche Telekom and Schwarz Group only solidifies the determination of German industry to lead the charge in building a robust, sovereign European digital future.