Germany and Europe must move faster to build their own AI technology or risk becoming dependent on outside providers, German Chancellor Friedrich Merz said on Monday, according to Reuters.

Speaking at an AI conference in Berlin, Merz called digital sovereignty “a truly existential question” and said Germany must “at all costs, avoid becoming entirely dependent on third parties.”

As AI spreads across the economy, countries that do not control the technology will increasingly rely on those that do, he argued.

Germany's ambition, he said, should be to develop and operate its own technology across the entire supply chain, from hardware to software.

Friedrich Merz acknowledged that reaching that point would require “an enormous technological and organisational effort.”

The issue has become a defining part of his government's agenda. Since taking office last year, the chancellor has pledged to accelerate the digital transformation of the German economy and established a dedicated ministry for digital affairs.

His government has also promised to catch up with European countries that have moved faster on digitalisation, including the Netherlands and Denmark. Germany adopted its first national AI strategy in 2018, but it has yet to translate that early start into a clear advantage.

The Ifo economics institute found that Germany is still not ready to benefit fully from the AI boom, Reuters reported. Its assessment pointed to a relatively small high-tech sector, weak digital public services, skills shortages, and the country's continued reliance on paper-based processes.

Merz is also looking for partners beyond Germany. Following a five-day trip to Singapore, Japan and South Korea, he said the country wanted to work with like-minded governments, naming Canada and France. He and French President Emmanuel Macron hosted a summit on European digital sovereignty in Berlin a year ago.

Investment commitments are beginning to take shape, too. At a summit last month, companies including Amazon and Nvidia joined pledges worth more than €225bn, according to the economy ministry. Germany also aims to quadruple its AI computing power by 2030.

The speech comes amid a wider European debate over who controls the technology underpinning the economy, as Brussels rewrites its tech rulebook in an effort to compete with the US.