“maxs. FRANKFURT. The impression has taken hold in Europe that it is lagging behind the United States and China technologically. However, an analysis by the European venture capital firm Redalpine concludes that Europe could well lay claim to leadership in six key sectors. The F.A.Z. had access to the analysis prior to its publication. To compile it, the report’s authors conducted numerous interviews with leading investors, researchers, and founders.
"Europe still possesses globally competitive—if not leading—basic research," says Redalpine partner Oliver Pabst. This research is closely integrated with the business sector and is partly responsible for Europe’s current leadership in fields such as nuclear fusion—one of the key sectors identified by Redalpine. According to the report's authors, the advantage lies not only in physics expertise but also in the supplier ecosystem that has developed over decades to support projects like the ITER experimental fusion reactor and CERN in Geneva.
The combination of scientific excellence and software is crucial in the field of programmable biology, an area where Redalpine sees great potential for Europe. This involves, for instance, the discovery and development of novel active ingredients or molecules using large datasets.
Pabst sees another locational advantage in Europe’s industrial backbone. Manufacturing and engineering are deeply rooted in the DNA of its economy.
This gives Europe a decisive advantage over the US, says Pabst: access to its own industrial data.
"We can build entirely new business models using this data," he says. Consequently, Redalpine also identifies the intelligent automation of business processes using artificial intelligence as a key sector. The true challenge in the AI era, they argue, lies less in the raw code itself than in linking AI products with corporate data and integrating them into highly complex manufacturing or other systems business processes. With companies like Langdock or n8n, Berlin-based startups are already achieving international success in the orchestration of AI agents.
Another technical trend also plays to Europe’s strengths in manufacturing: "Hardware is back," says Pabst. In many areas, the competitive advantage no longer lies in software alone, but in the combination of software and hardware. According to the report, this applies, for example, to digital health applications, which hold great potential—particularly when combined with real-time patient data or data from clinical routines. The wearable devices required for this serve as a crucial differentiator. In this instance, Europe’s strict regulation actually works to its advantage, as it fosters trust within this sensitive sector.
Hardware expertise is also an asset in robotics. The analysis suggests that Europe’s major industrial groups could play a role as early adopters and collaborative partners—contributing their expertise in precision manufacturing later on, but acting primarily as data providers. Robotics is essentially the translation of artificial intelligence into the physical world—and the biggest bottleneck here is not hardware or learning algorithms, but the availability of industrial data. A world-class robotics cluster has long since emerged around ETH Zurich.
Despite an obvious lag behind SpaceX in rocket launches, Redalpine also sees significant potential in the space economy, which is benefiting from Europe’s newly asserted drive for sovereignty. While rocket manufacturers like Munich-based Isar Aerospace are gaining momentum, Redalpine also highlights the role of European startups in commercializing data obtained in space.” [1]
Nuclear fusion will be great technology in twenty years, and will always stay this way – great technology in twenty years.
Western Europeans don’t understand deeply enough AI and industrial production. This misunderstanding might be caused by some regional brain disease, might be even virus-caused.
Most important thing is that to run AI and industry, you need a lot of stable and cheap energy. Today this is natural gas.
Where is the cheap stable natural gas that Germans used to run their industry? Gone to China. Western Europeans suddenly refused to buy it from Russians, Russians are forced to sell it cheaply to Chinese, Chinese are developing AI based technology faster than Americans. That is just crazy.
Europe's shift away from Russian pipeline gas drastically raised industrial costs, driving heavy manufacturing and energy investments toward Asia. Meanwhile, China's massive, low-cost energy infrastructure—including extensive coal and renewable capacity—fuels its rapid advancement in artificial intelligence, robotics, and industrial automation.
The energy-AI-industry dynamic involves several major factors:
• The European Energy Crisis: The shift away from Russian natural gas forced Western Europe, particularly Germany, to rely on more expensive liquefied natural gas (LNG). This spike in energy costs has weighed heavily on the region's industrial competitiveness, leading to production slowdowns and shifts in investment abroad.
• Russian Gas Realities: With European markets largely phased out, Russia has increased energy exports to China. However, Moscow's pivot to Asia comes at a steep discount, with Russian gas and oil often priced significantly lower than what European buyers historically paid.
• The AI and Energy Nexus: Running advanced AI models requires massive, uninterrupted energy supplies for data centers. While the United States leads in funding and foundational Large Language Models (LLMs), China's abundant, state-backed energy and manufacturing dominance give it a major edge in scaling AI for robotics, automation, and "physical AI".
• European Sovereign AI: Western Europe lags behind in commercial AI deployment and venture capital investment, partially due to stringent regulatory environments. However, European firms are increasingly focusing on specialized solutions, data sovereignty, and compliance.
While some critics view Europe's regulatory-first approach as a barrier to innovation, the core of the global shift lies in the geographical realignment of energy and heavy manufacturing. So much for Western European dreams.
1. Wo Europa technologisch punkten kann: Führungsanspruch für Roboter, Kernfusion und programmierbare Biologie. Frankfurter Allgemeine Zeitung; Frankfurt. 06 Mar 2026: 22.
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