Deutsche Telekom and Schwarz Group: Joint "AI Gigafactory" in Planning

Contents

The Schwarz Group, the parent company of Lidl and Kaufland, is reportedly in talks with Deutsche Telekom to bid for the large AI data centers financed by the European Union. This is reported by six people familiar with the matter.

Interest in cooperation exists

The negotiations are said to be well advanced according to the Handelsblatt report, but a formal agreement is still pending, according to three insiders familiar with the proceedings. The people familiar with the matter further state that Telekom CEO Timotheus Höttges and Schwarz CEO Gerd Chrzanowski initiated the new partnership. According to the report, Canadian financial investor Brookfield could support the project as a financier.

An official confirmation of the project is still pending. A Telekom spokeswoman merely told Handelsblatt that the group is "interested in building up the EU AI Gigafactory in a leading position for Germany as a location." Cooperation with the Schwarz Group was not yet confirmed. Neither the Schwarz Group nor Brookfield provided a statement, it is said.

The companies' interest in cooperation was indicated by a statement from Rolf Schumann, co-CEO of the digital subsidiary Schwarz Digits, at the summit for European digital sovereignty in mid-November in Berlin. He said his company had teamed up with Telekom "to bring the Gigafactory to Germany."

This is not the first attempt to build a joint AI data center: In the summer of this year, Deutsche Telekom, Ionos, SAP, Siemens, and the Schwarz Group were unable to agree on a joint proposal.

EU supports AI Gigafactories

$(LB4799188:The aim of the newly emerging AI data centers|_blank) – or AI Gigafactories – is to catch up with other AI locations in the world, such as the United States or China. The EU plans up to five such data centers in Europe and finances up to 35 percent of the estimated costs of three to five billion euros. Experts consider six billion euros or more to be necessary.

Federal Digital Minister Karsten Wildberger (CDU) $(LB4970907:hopes for a much-needed breakthrough from the project|_blank). "AI is less a technical capability: it is a fundamental strategic key competence. And for Germany and Europe, the decision must be clear: not to be spectators, but to help shape it."

Both the Schwarz Group and Deutsche Telekom had announced the construction of their AI data centers in recent weeks. Telekom is building an AI data center in Munich in partnership with Nvidia and wants to "test the waters" with it.

Construction of first AI data centers announced

The first AI data center is expected to cost around one billion euros and, with 10,000 GPUs, will be rather small compared to Microsoft's plans in the US state of Wisconsin. It is to be connected via T-Cloud and also used with simple services for smaller companies and users with AI needs.

The $(LB4979214:AI data center of the Lidl parent Schwarz Group|_blank) is to be slightly larger with 11 billion euros and will be built in Lübbenau. It will be equipped with up to 100,000 AI-specific chips (GPUs). The Schwarz Group plans not only to process its data – i.e., data from logistics and ordering processes, payment transactions, and customer loyalty programs for Lidl and Kaufland. Rather, storage and computing power are also to be offered to external customers.

(afl)