French AI champion Mistral AI is actively exploring the possibility of designing and eventually manufacturing its own custom chips, CEO Arthur Mensch told CNBC.

The move marks the company’s clearest signal yet of its desire to gain greater control over its infrastructure as it competes with U.S. leaders OpenAI and Anthropic.

“Of course, it is interesting,” Mensch said when asked about developing proprietary semiconductors.

He added that the company is not ruling out the move in the future.

Mensch explained that custom chips could significantly lower the cost of inference, the process of running AI models, by optimizing hardware and software integration.

“Owning the chips may come, I think it should come at some point, but for now we are relying on Nvidia, which is a great partner to us, and we’re testing a few things here and there,” he said.

This marks the first time Mensch has publicly discussed Mistral’s semiconductor ambitions, highlighting a strategic evolution for the Paris-based startup. Valued at nearly 12 billion euros, Mistral is often positioned as Europe’s strongest contender in the global AI race. Developing its own chips would allow it to reduce dependency on external suppliers, lower long-term costs, and potentially create differentiated offerings tailored to European regulatory and data sovereignty requirements.

Data Center Expansion and Infrastructure Push

Mistral announced on Thursday a new data center in France dedicated specifically to inference workloads. The company has already invested 4 billion euros in data centers across France and Sweden as it ramps up compute capacity to meet growing demand.

“Europe is lagging behind when it comes to buildout of infrastructure, and so we are investing to close that gap,” Mensch told CNBC.

He framed the issue not just as technological but macroeconomic, noting that Europe cannot afford a massive commercial deficit in AI while aiming to remain competitive globally.

“You can’t afford to have a commercial deficit of a trillion if you actually want to stay competitive in the race, and so that’s something I think that people are realizing that we’re talking about something that should be concerning for any one of us,” he said.

The additional capacity in France will support Mistral’s enterprise customers as well as other AI labs seeking compute resources. Mensch noted strong demand from the broader AI community.

“AI labs are in sore need of compute, and we have some of it, and some of them are actually asking us for a lot of compute today,” he said.

He emphasized that customer needs will take priority, while still allocating resources to collaborative AI development.

New Agentic Platform “Vibe” Targets Enterprise Use Cases

Mistral also unveiled Vibe, a new agentic AI platform designed for enterprises. Agentic AI, systems capable of autonomously planning and executing complex tasks, has become a major focus for the industry, with competitors like OpenAI and Anthropic rolling out similar offerings.

Mistral’s Chief Technology Officer Timothée Lacroix described the platform in a statement saying: “Vibe is the agent platform for the tasks at hand, putting frontier AI to work. Users can set the brief and move on, as Vibe thinks, drafts, and delivers finished work from a single conversation. Vibe Code writes, tests, and deploys code across codebases.”

The platform targets practical enterprise applications such as document drafting, coding, and workflow automation, aiming to deliver measurable productivity gains rather than general chat capabilities.

Mistral is targeting 1 billion euros in revenue for 2026, a significant jump from around 200 million euros the previous year. While ambitious, this figure remains well behind U.S. rivals. OpenAI’s annualized recurring revenue reached $20 billion in 2025, and Anthropic is projected to hit $10.9 billion in revenue for the second quarter of 2026 alone.

The company’s enterprise focus, with customers including chip equipment leader ASML, differentiates it in a market increasingly crowded with general-purpose models. By investing heavily in European data centers and exploring custom silicon, Mistral is betting that sovereignty, compliance, and regional expertise will give it an edge in serving European businesses wary of over-reliance on U.S. cloud providers.

However, Mensch’s comments on custom chips reflect a broader European push for technological sovereignty. With heavy dependence on U.S. and Asian hardware, European AI companies face risks from export controls, data localization rules, and supply chain vulnerabilities. Developing in-house chip capabilities could help Mistral, and by extension Europe, reduce these dependencies while fostering local innovation ecosystems.

The company’s data center investments also address a critical gap. Europe has lagged in AI infrastructure buildout compared to the U.S. and China. By stepping in as both a developer and provider of compute, Mistral is helping close that gap while positioning itself as a key infrastructure player rather than solely a model provider.

However, the company has more challenges to contend with. Custom chip design requires enormous capital, specialized talent, and time. Success is far from guaranteed, and Mistral will need to balance these long-term ambitions with near-term revenue growth and competition from better-funded U.S. rivals.

Chinese electric vehicle maker Xpeng said Wednesday it had been selected among the first companies to receive support from a new Guangdong provincial government investment fund aimed at accelerating the growth of strategic emerging industries.

The funding, which highlights how Beijing and local authorities are increasingly directing state capital toward artificial intelligence-linked mobility technologies, is also seen as another EV subsidy from the government.

The Guangzhou-based automaker, which has been expanding beyond electric vehicles into robotaxis, humanoid robotics, and flying cars, did not disclose the size of the investment commitment.

But the symbolism of the backing may prove as important as the funding itself. The Guangdong fund, described as the province’s first corporate-style government investment vehicle with a perpetual operating structure, has a planned size of 100 billion yuan ($15 billion), including an initial registered capital base of 50 billion yuan.

The structure marks a broader shift in China’s industrial policy, where local governments are increasingly deploying what officials describe as “patient capital” to support sectors considered strategically vital for long-term technological competitiveness.

“The development of strategic emerging industries relies on ‘patient capital’ that can span economic cycles,” Xpeng founder and chief executive He Xiaopeng said in a statement.

The comment captures a growing concern inside China’s technology and manufacturing sectors: that many next-generation industries, particularly those tied to AI and advanced mobility, require sustained financing over many years before becoming commercially profitable.

Unlike traditional venture capital, which often seeks quicker returns, state-backed “patient capital” funds are designed to tolerate longer development timelines and higher upfront infrastructure costs.

For Xpeng, the support comes at a moment of transition.

The company has been repositioning itself from a pure electric vehicle manufacturer into a broader AI and robotics platform company. While China’s EV market remains fiercely competitive and crowded with price wars, Xpeng has been attempting to differentiate itself through autonomous driving software, AI-powered mobility systems and futuristic transportation concepts.

That includes heavy investment in robotaxi systems, humanoid robots and electric vertical takeoff and landing aircraft, commonly referred to as flying cars.

Those bets align closely with Beijing’s industrial priorities.

Chinese policymakers have identified embodied AI, robotics, autonomous transportation and advanced manufacturing as critical areas where China hopes to reduce dependence on Western technology while creating new engines of economic growth.

Guangdong province, one of China’s largest manufacturing and export hubs, has become a key battleground in that effort. Authorities there are attempting to transition the regional economy away from lower-margin manufacturing toward higher-value sectors tied to semiconductors, AI infrastructure, robotics and smart mobility.

The launch of the Guangdong strategic industries fund also comes amid intensifying global competition around industrial policy.

The United States has expanded subsidies for semiconductors and clean energy technologies through measures such as the CHIPS Act and Inflation Reduction Act, while Europe is pushing for greater technological sovereignty in AI, chips and telecommunications. China, facing mounting U.S. export restrictions on advanced semiconductors and AI-related technologies, has responded by accelerating state-backed investment in domestic innovation ecosystems.

Xpeng’s inclusion among the first batch of companies supported by the fund suggests authorities view the automaker as more than simply a car company.

Investors have increasingly viewed Xpeng as one of the Chinese EV makers most aggressively pursuing AI integration. The company has invested heavily in autonomous driving models, in-car AI systems and robotics research, areas that require massive computing infrastructure and long-term research spending.

That transformation, however, carries significant financial risk. The Chinese EV sector continues to suffer from overcapacity, margin pressure and brutal pricing competition led by larger rivals including BYD and Tesla in China’s domestic market.

Many automakers are therefore looking beyond vehicle sales toward software, autonomous mobility services and AI ecosystems as potential future profit centers. State-backed funding could help Xpeng absorb some of the enormous costs associated with those ambitions.

The “perpetual” nature of the Guangdong fund is also notable because it signals a willingness by local authorities to support industries through prolonged market downturns and economic volatility. Chinese officials have increasingly emphasized long-term technological resilience rather than short-term profitability as geopolitical tensions reshape global supply chains.

For Guangdong, supporting companies like Xpeng may also serve a broader regional objective: ensuring southern China remains central to the next phase of global manufacturing and AI-driven industrial transformation.

The move is another evidence that the competition over artificial intelligence is no longer confined to software models and semiconductors alone. Increasingly, governments are treating autonomous vehicles, robotics and intelligent transportation systems as strategic national industries capable of reshaping economic power over the next decade.

A growing clash between the Canadian government and major U.S. technology companies is exposing how the global fight over encryption is entering a more confrontational phase, with implications reaching far beyond Canada’s borders.

At the center of the dispute is Bill C-22, an online safety and national security measure proposed by Canada’s Liberal government that technology firms fear could eventually allow authorities to secretly compel companies to weaken the encryption protecting billions of devices and communications worldwide.

Executives from Apple Inc. and Alphabet Inc. used testimony before Canada’s House of Commons Standing Committee on Public Safety and National Security on Tuesday to push for major amendments, warning lawmakers that the legislation lacks sufficient safeguards against covert government demands for access to encrypted systems.

The confrontation is another episode in the global struggle between governments seeking greater surveillance capabilities and technology companies increasingly positioning encryption as critical infrastructure for the digital economy.

Canadian authorities argue the legislation would help security agencies investigate terrorism, organized crime, child exploitation, and cyber threats more effectively by enabling earlier intervention. Officials have framed the bill as part of a wider effort to modernize law enforcement powers in an era where encrypted messaging platforms and cloud services have become central to daily communication.

But the companies argue the proposal creates dangerous ambiguity.

While the bill does not explicitly require firms to break end-to-end encryption, Apple, Google, and Meta Platforms warn that its structure could allow authorities to issue confidential technical orders compelling firms to create undisclosed access mechanisms, effectively establishing legal pathways for encryption backdoors.

Jeanette Patell, Google’s director for government affairs and public policy in Canada, told lawmakers that “secret orders are out of step with other democratic countries and would severely restrict companies’ ability to be transparent with users about how their data is protected.”

The testimony pinpoints mounting concern within Silicon Valley that governments are increasingly pursuing indirect methods to gain access to encrypted data after years of public resistance to explicit anti-encryption laws.

Apple’s intervention carried particular significance because the company is already locked in a similar dispute in the United Kingdom. Last year, British authorities reportedly issued a confidential order demanding access to encrypted user data. Apple responded by removing certain encrypted cloud backup features from the UK market rather than comply fully with the request.

That episode has become a defining example inside the technology industry of how governments may pressure firms privately while avoiding politically explosive public debates over encryption.

During Tuesday’s hearing, Conservative lawmaker Frank Caputo asked Apple executive Erik Neuenschwander whether the company could reconsider its Canadian operations if ordered to weaken device security.

“I can’t speculate what would happen in that situation,” Neuenschwander replied, while emphasizing Apple’s hope that lawmakers would amend the legislation.

The exchange highlighted how the dispute is no longer simply about privacy and is increasingly becoming an economic and geopolitical issue tied to digital sovereignty, cybersecurity resilience, and control over technological infrastructure.

Technology firms argue that encryption cannot be selectively weakened for “good actors” alone. Security experts have long maintained that once vulnerabilities are intentionally introduced into widely used systems, they can eventually be exploited by hostile governments, cybercriminals, or espionage groups.

Those concerns are intensifying as cyberattacks targeting financial systems, hospitals, energy infrastructure, and government agencies continue to rise globally. Many cybersecurity officials privately acknowledge the paradox confronting governments: the same encryption that frustrates criminal investigations also protects critical infrastructure and national economies from large-scale cyber intrusions.

The Canadian bill arrives at a time when governments across North America and Europe are simultaneously seeking tighter oversight of artificial intelligence, social media platforms, cloud infrastructure, and digital communications systems.

For Ottawa, the legislation also reflects a broader push to establish stronger state authority over online spaces amid growing fears around extremism, cybercrime, and foreign interference.

But the timing risks placing Canada in the middle of a widening global regulatory fracture. Countries including the UK and Australia have already introduced laws expanding government powers over encrypted platforms, while U.S. officials continue pressuring technology companies to provide lawful access mechanisms. Meanwhile, privacy-focused jurisdictions in Europe have often taken the opposite position, emphasizing stronger consumer protections and data security standards.

That divergence is creating operational headaches for multinational technology firms attempting to maintain globally consistent products. Industry executives warn that if Canada proceeds without explicit judicial oversight and transparency protections, it could encourage other governments to pursue similar frameworks allowing confidential technical directives.

The debate could also carry economic consequences. Canada has become an increasingly important destination for AI, cloud computing, and cybersecurity investment, particularly in Toronto, Montreal, and Vancouver. Large technology companies are investing billions into data centers, research hubs, and digital infrastructure projects across the country.

Executives privately fear that uncertainty surrounding encryption policy could complicate future investment decisions, particularly as firms weigh where to expand sensitive cloud and AI operations. Civil liberties organizations have also raised alarm about the bill’s potential implications for democratic accountability, arguing that secret government orders affecting digital infrastructure could erode public trust in technology platforms while limiting independent oversight.