BERLIN, June 13 (Reuters) - Deutsche Telekom

will join forces with Nvidia ( NVDA ) to establish an artificial

intelligence cloud for European manufacturers in Germany, the

companies said on Friday.

Nvidia ( NVDA ) will supply 10,000 chips, or graphics processing

units (GPUs), to be built into Deutsche Telekom's existing data

centres.

The cloud, which the companies aim to implement by 2026, is

seen as an important stepping stone towards the construction of

large-scale data centres, a crucial part of the new German

government's drive to modernise the country's lagging industry

and part of EU efforts to catch up with other world powers on

AI.

Nvidia ( NVDA ) CEO Jensen Huang unveiled on Wednesday the U.S.

company's plans to build an AI cloud platform in Germany.

Deutsche Telekom's involvement was announced on Friday as Huang

also met with German Chancellor Friedrich Merz.

"Investments in strategic AI infrastructures are central to

our country's innovative strength," Merz said in a statement

following the meeting.

"We expressly welcome the commitment of Nvidia ( NVDA ) and its

partners. This cooperation can be an important step for

Germany's digital sovereignty and economic future," he added.

GPUs have emerged as an important component in the

ramp-up of AI.

Under Merz, Germany plans to promote the construction of

large data centres to accommodate the shift towards AI in the

coming years, aiming to secure up to 100,000 GPUs with a 35%

state subsidy.

"But that means that the industry has to take over 65%,"

said Thomas Jarzombek, the government's junior minister for

digital affairs.

In February, the European Commission unveiled plans to

provide $20 billion in funding to construct AI data centres to

catch up with the U.S. and China.

Deutsche Telekom announced last month that it has teamed up

with tech giant SAP, web hosting firm Ionos

and unlisted retailer Schwarz to seek European Union support to

build such a centre in Germany.

Nvidia ( NVDA ) is also partnering with European AI champion Mistral

to create AI computing that runs on 18,000 of the latest Nvidia ( NVDA )

chips for European businesses.