OVHcloud CEO says public commitment for EU AI gigafactories too small

By Leo Marchandon

Sept 23 (Reuters) - OVHcloud CEO Octave Klaba on Tuesday estimated operators of Europe's proposed AI gigafactories would need annual sales of 300 million euros to 400 million euros just to break even on facilities built around fast-depreciating graphics chips. 

Klaba said a proposed 200-million-euro public commitment to buy AI services over five years was too small to underpin the scale of private investment required and said focus on national markets prevented OVHcloud from joining existing French consortia. 

The EuroHPC program is seeking industry consortia to build and operate up to seven AI gigafactories: large computing facilities for training, fine-tuning and running AI models.

"Any national strategy is doomed to failure: there are simply not enough customers to make investments of this size profitable. In our view, national demand is too weak and we must operate on a European scale," he said.

Klaba said the public sector would buy 40 million euros of computing services a year, while an operator would spend at least 600 million euros for chips alone. "The numbers don't add up," he said. 

He estimated a gigafactory would need 300 million euros to 400 million euros in annual revenue to break even, making the public order worth only 10%-15% of required turnover.

(Reporting by Leo Marchandon in Gdansk; Editing by Devika Syamnath)