This Tech Sovereignty Package contains four parts. Two are proposed laws—the European Chips Act 2.0 and the Cloud and AI Development Act. The other two are broader strategies—one to promote open-source software and one to shore up the EU’s electric grid. Before the first two can become law, they must go through a long process involving the EU’s other two lawmaking bodies: the Parliament and the Council.

The Commission’s vision places European governments and crucial industry at the forefront of change, encouraging them to fund and buy European tech. Some analysts, however, are unconvinced the measures go far enough to change the status quo.

Part 1: Chips Act 2.0

As indicated in the name, the Chips Act 2.0 follows the EU’s original Chips Act, adopted in 2023 (and not to be confused with its similarly named American counterpart.) The first European Chips Act encouraged investment in EU semiconductor production, aiming to reach a 20% share in the world market for “cutting-edge and sustainable” microchips by 2030. It supported pilot lines in areas like sub-2 nm chips and photonics, in addition to both large fabs and small startups.

Early results have been mixed—a 2025 audit found that the first Chips Act had created progress in areas like chip design and pilot lines, but deemed it “unlikely to be sufficient” to reach an “overly ambitious” target.

One criticism of the first Chips Act was that it did little to cultivate demand for European-made semiconductors. The Chips Act 2.0, then, includes demand-boosting measures that encourage governments and industry to use European chips, in addition to retaining its supply-side funding.

There are new supply-side elements, too. The Chips Act 2.0 allows the Commission to fund certain fabs as “strategic projects” and fast-track them through permitting. The Commission has proposed an open-access foundry to manufacture chips at 3 nm process nodes or lower, which could start pilot production between 2030 and 2033.

If successful, European semiconductor manufacturers could take over the supply for industrial firms in automotive, defence, and advanced manufacturing. Today, these firms are especially vulnerable to global supply chain disruptions.

At the same time, some analysts still question whether the Chips Act will create enough demand. “The Commission clearly recognizes this in the revision and devotes considerable attention to demand-side levers,” says Tillman Schenk, researcher at Bruegel, a Brussels-based think tank. “However, these instruments currently strike me as somewhat underdeveloped.”

Some analysts write that to raise demand the EU must explicitly require, not merely encourage, governments to “buy European.”

Part 2: Cloud and AI Development Act

The accompanying Cloud and AI Development Act (CADA) focuses on cloud services and data centers. The EU trails both the U.S. and China in total data center capacity, and European leaders say they need to close this cloud gap if both EU governments and industry are to make the most of cutting-edge AI.

Therefore, CADA calls for a tripling of EU data center capacity by the early 2030s.

Michael Winterson, Secretary General of the European Data Centre Association, calls the goal “achievable in principle” and says that “demand alone could justify a tripling of capacity.” Achieving this goal will require dramatically speeding up data center projects that today might get stuck in permitting or waiting in a queue for electrical supply, he says.

CADA stipulates that member states should designate particular projects and “acceleration zones” for fast-tracked approval. CADA stipulates that, by 2030, data center operators should be able to obtain the necessary permits and grid access—often a years-long process today—in 18 months.

But in Europe, there are some rather large elephants in the cloud. Today, four U.S. hyperscalers—AWS, Microsoft Azure, Google Cloud, and IBM Cloud—account for over two-thirds of EU cloud services. This troubles some Europeans because U.S. law authorizes U.S. authorities to compel U.S. firms to hand over data even if stored abroad.

To ensure that more sensitive European data stays within Europe, CADA lays out a sliding scale of four “assurance levels.” Higher levels require more EU-located data, infrastructure, staff, and supply chains. However, national authorities can choose assurance levels as they see fit, so the same application might use different levels in different countries.

Some analysts like EuroStack’s Stéfane Fermigier note that this leaves the door open for the assurance levels to be applied unevenly. American hyperscalers could locate data centers in the EU, claim sovereignty compliance, and avoid ceding ground to their smaller European counterparts.

Part 3: EU energy system roadmap

The announcement of a threefold increase in the EU’s data center capacity is unlikely to comfort the many Europeans who oppose their construction, citing concerns about their environmental footprints or their potential to strain the electrical grid. Partly in response, the EU’s tech sovereignty package includes a “strategic roadmap” for Europe’s electrical grids.

The Commission has proposed a rating system that would grade data centers based on their efficiency and environmental footprint, but this scheme has reportedly been delayed under pressure from data center operators and some EU member states.

The roadmap includes support and research projects for smart grids and for AI models in the energy sector. It also plans to enable EU electric grids to more easily exchange data across borders.

Unlike the Chips Acts or CADA, the roadmap is not a proposed law. In many cases, its measures are research projects or promises to introduce future legislation by the end of 2027.

Part 4: Open Source Strategy

European public administrations spend an estimated €264 billion per year on proprietary IT, with 80% going to American companies. In the past several years some European bodies have made sporadic moves towards open-source alternatives, perhaps most notably the French civil service’s migration from Windows to Linux.

Now, the European Commission has unveiled an expensive strategy to promote open source in the public sector. In theory, open source could at once save on costs, phase out non-European software, and benefit European open source developers.

The Commission’s plan stretches beyond office software and operating systems. It envisions public services partaking in a “vibrant” open-source ecosystem for everything from AI to RISC-V semiconductors to Web 4.0 architecture. It plans to fund open-source startups and developers in key sectors.

Although this strategy is not in itself a law, CADA includes some open-source measures, like a provision to “encourage” public sector bodies to use open source cloud and AI. In theory, this could establish a precedent for governments to choose “open source first.”

Jordan Maris, EU Policy Analyst for the Open Source Initiative, is optimistic about the package. He particularly believes it could be a boon for maintainers of core software. “They will likely receive recognition and opportunities for funding,” he says. “My guess is it will predominantly serve individual developers but some community-led projects could also benefit.”

Maris also says it can benefit developers of crucial enterprise software like Nextcloud, Collabora Online, and Euro-Office.

Other open source advocates, however, argue that the open-source measures in CADA do not go far enough. In particular, since CADA’s articles “encourage” public-sector bodies to prioritize open source rather than “require” them, the public sector may instead let inertia take its course.

This package is not final. The Chips Act 2.0 and CADA will now proceed through further European lawmaking, involving the European Council and European Parliament, a process that inevitably changes the content.

There’s also pressure from U.S. tech firms and some of the EU’s own member states to water down some of the requirements, as already happened with some of the open source measures.