Deutsche Telekom and Lidl owner Schwarz Group are looking to build an AI data center in Germany, according to a report.

According to Handelsblatt, the pair are reportedly in talks to apply for European Union (EU) funding through the organization's €20 billion ($23.2bn) AI gigafactories fund. The money will be used to finance four data centers across the EU, with each facility using around 100,000 of the latest-generation AI chips in order to train large AI models.

This was announced in February of this year as part of the EU’s €200bn ($209bn) InvestAI initiative, which will see investment in AI more generally.

It has also been reported that Canadian alternative investment firm Brookfield is backing the project.

Both Schwarz Group and Brookfield declined to comment on the matter, but a spokesperson from Deutsche Telekom told Handelsblatt that the company was “interested in establishing the EU AI Gigafactory in a leading position for Germany.”

It was previously reported that Deutsche Telekom, Schwarz, enterprise software provider SAP, and web hosting firm Ionos were negotiating a joint application with EU backing for an AI data center in the country.

Deutsche Telekom is one of the world’s largest telcos by revenue. Since 2023, the company has capitalized on the demand for AI data centers, and last month, the company announced that it would establish a data center with Nvidia in Munich for an “industrial AI cloud” offering.

Schwarz Group is Europe’s largest retailer, operating stores under the Lidl and Kaufland brands. Schwarz Digital is the group’s IT and digital division, and StackIT is the company’s cloud, cybersecurity, and AI units.

The group recently broke ground on a 200MW data center in Lübbenau, Germany.