The race isn’t just for land. In Munich, Paris and the Bay Area, researchers, VCs, and policymakers are rallying to cultivate local petri-dishes of public-private innovation. Expertise varies regionally: “In the Bay Area, AI is the dominant topic – from large language models to AI at the edge. In Europe, it’s industrial and automotive solutions,” says Patrick Aidoune, Group VP of Microcontrollers, Digital ICs and RF, STMicroelectronics.

Munich in Germany, for example, is a hub of innovation and investment. Ranked fifth in the EU Global Tech Ecosystem Index 2025, it has coupled academic heft with policy support. “Bavaria as a federal state prioritized AI early. With the Technical University of Munich and the IWA Valley startup scene, Munich ranks high for AI in Europe,” says Stefan Schaible, senior partner at Roland Berger. Senior Partner Marcus Berret says change is afoot in the whole EU bloc: “For 20 years we complained Europe was good at hardware, bad at software. That is changing. Now there is up to one trillion euros in additional funding for infrastructure and innovation.” Talent flows are shifting too, according to Dr. Oliver Schoppe, principal at VC firm UVC Partners: “We have seen an influx of talent to Europe, especially from the U.S., driven by political reasons.” 

And France is another European forerunner, with major players such as KLA Ancestors in hardware and Mistral in AI software. “The French government’s political support has strengthened this ecosystem,” says Youssef El Manssouri, co-founder and CEO of Sesterce. But Europe’s Achilles heel remains scale. “Too many young companies struggle to grow. If Europe wants to foster innovation, we must reduce bureaucracy,” says Prof. Dr. Niko Mohr, CEO of Rittal and Executive Board Member at Friedhelm Loh Group.