Europe lagging behind in AI growth
The global market for generative AI is exploding and is expected to grow by 30-40% annually. This booming sector, estimated to be worth more than €130 billion by 2023, is creating intense competition to attract new companies. Although the United States currently dominates this landscape with €62.5 billion in private investment by 2023, several European countries are emerging as attractive hubs for AI startups.
A recent report by AI prompt management tool AIPRM, which analyses factors such as newly funded companies, private investment, research and development, start-up funding and revenue growth, ranks the 14 best countries for launching an AI company.
The United States tops the list, followed by Singapore and Sweden, which shows remarkable revenue growth of 1,127%. Switzerland occupied fourth place thanks to its favourable business climate, while Germany landed in sixth place despite a strong economy, possibly hampered by less favourable startup conditions compared to Switzerland.
Spain outperformed Germany and France in terms of business environment and startup funding, achieving a higher ranking. France, the EU leader in newly funded AI companies with €9.42 billion in private investment, ranks ninth globally. However, the number of AI acquisitions in France has declined slightly from the previous year.
The economic potential of AI in Europe is significant. McKinsey & Company estimates that generative AI could contribute €521 billion to the European economy by 2030, about a tenth of Germany’s GDP. To strengthen its competitiveness in this burgeoning market, Europe needs to expand the adoption of AI technology in various sectors.
Currently, Europe excels in only one of eight segments within the AI market: AI semiconductor devices. The continent lags far behind in other areas such as raw materials, AI semiconductor design and manufacturing, cloud infrastructure and supercomputers. To address these gaps, the European Commission launched an AI innovation package in January 2024 to support startups and SMEs.
Further investment is crucial, particularly in healthcare and defense applications, along with retraining programs to retain talent and ensure a competitive workforce. Competitive energy prices are also essential, as AI is expected to lead to a significant increase in power demand in data centers, possibly up to 5 percent of total electricity consumption by the end of the decade. The study shows that generative AI could increase annual productivity growth in Europe by up to 3% through 2030, addressing current labor productivity challenges.
Business AM
Subscribers 0
Fans 0
Followers 0
Followers