Europe lags behind US and China in orbital data center race

A report from the European Space Policy Institute (ESPI), published in August 2026, paints a stark picture of Europe’s position in the emerging orbital data center (ODC) market. While the US and China pour billions into launching server farms into low Earth orbit, Europe’s efforts remain stuck at the demonstration stage, limited to small-scale experiments.

The scale gap is enormous

China’s ambitions in orbital computing have moved well past the blueprint phase. In May 2025, the country deployed 12 satellites as part of its Three-Body Constellation, a network designed to process data directly in orbit rather than beaming it back to terrestrial facilities.

In April 2026, Beijing Orbital Twilight Technology secured an $8.4 billion credit line to fund its orbital infrastructure buildout. Then in July 2026, Shanghai Xingshu Tiansuan launched the first satellites in what’s planned to be a 1,000-satellite network.

The US side of the ledger is equally staggering. Starcloud, formerly known as Lumen Orbit, filed with the FCC for a constellation of 88,000 satellites with an estimated capacity of roughly 20 GW. Orbital, another American venture, filed for up to 100,000 satellites with approximately 10 GW of capacity.

Meanwhile, Europe’s most notable contributions to the field include ESA’s Φ-sat-2, a single demonstration satellite launched in August 2024, and France’s Alatyr project, which is focused on robotic assembly techniques for satellite construction.

Why orbit instead of ground?

The ESPI report notes that while near-term applications will likely focus on Earth observation data processing, the longer-term prize is AI training infrastructure. Orbital data centers could eventually serve as distributed computing networks for training large AI models, free from the land, water, and energy constraints that increasingly plague terrestrial data center expansion. That longer-term vision requires sustained investment over more than a decade, according to the report.

ESPI’s prescription for catching up

ESPI urges coordinated policy action between the EU and ESA, arguing that fragmented national approaches won’t generate the scale needed to compete with state-backed Chinese programs or well-capitalized American startups. The institute calls for a flagship ODC initiative to be embedded within the EU’s 2028-2034 research program. Early customer contracts are another key recommendation, to create guaranteed demand that gives private companies the confidence to invest in orbital computing hardware.

Without these steps, the report warns, Europe faces a future where its AI systems, Earth observation capabilities, and critical data processing workflows depend on American or Chinese orbital infrastructure.

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