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Deutsche Telekom and Schwarz Group to build AI data centre, German newspaper reports

Deutsche Telekom and Schwarz Group plan EU-backed AI 'gigafactory' to boost Europe's compute capacity

Key Insights

Deutsche Telekom and Schwarz Group are preparing to jointly build a large-scale AI data centre 'gigafactory' in Germany, according to reporting from Handelsblatt. The effort aligns with the EU's 20 billion funding push to expand AI infrastructure and reduce dependence on U.S. and Chinese hyperscalers. Talks are described as advanced but not yet finalized.

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Germany moves to boost AI compute capacity

A report from German newspaper Handelsblatt reveals that Deutsche Telekom and the Schwarz Group (owner of Lidl and Kaufland) are in advanced discussions to build a major AI-focused data centre, described as an AI gigafactory. Such a facility would be designed specifically for the heavy GPU and compute requirements of modern AI training and inference.

Tied to the EU's 20B AI infrastructure program

The two companies plan to apply jointly for European Union funding, after the European Commission unveiled a 20 billion initiative earlier in the year aimed at speeding up development of large AI compute facilities across Europe. The EU views compute availability as a strategic dependency and wants to narrow the gap with the U.S. and China.

Negotiations progressing but no formal deal yet

Six people familiar with the matter told Handelsblatt that the collaboration is moving forward, though no formal agreement has been signed. Three sources said negotiations were well advanced, indicating a high likelihood that a formal announcement could follow once EU funding pathways become clearer.

Strategic significance

A joint venture between a major telecom operator and a large retail technology group would give Germany a stronger footing in:
  • Domestic AI compute sovereignty
  • Enterprise-grade cloud infrastructure
  • Competition with U.S. hyperscalers for European AI workloads

While details such as location, hardware footprint, timelines, and capacity weren't disclosed, the move signals a broader trend: European enterprises partnering to secure local AI infrastructure, rather than relying solely on global tech giants.

Reporting credits: Reuters / Handelsblatt.

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