TAMPA, Fla. — Europe risks becoming dependent on foreign orbital computing infrastructure as U.S. companies and China’s government-led push accelerate the development of space-based data centers, according to the European Space Policy Institute (ESPI).

A report published by the independent think tank Aug. 5 singled out China’s rapid progress in the field, boosted by a mix of national policy, municipal initiatives and backing from state-owned enterprises.

“While European actors continue to weigh the development of orbital data centers (ODCs), Chinese institutions and companies are already moving towards implementation,” the report warned.

“Three-Body Constellation, launched by ADA Space in 2025, marked the first operational example of space-based computing; and Beijing has not slowed down since.”

Startup ADAspace, working with Chinese research institution Zhejiang Lab, deployed the first 12 satellites of a proposed 2,800-satellite network in May 2025.

Nearly nine months later, China said in-orbit tests had demonstrated core capabilities including networking, computing, model deployment and scientific payload verification.

Other Chinese ventures pursuing orbital computing include China Mobile, Comospace, Bailing Aerospace, Orbital Chenguang and Shanghai Xingshu Tiansuan Space Technology Co., which reportedly started deploying a planned 1,000-satellite space-computing network in July.

Chinese launch companies iSpace and Nayuta Space have also outlined plans to enter the market.

And in June, Beijing took further steps to build an industrial framework around orbital computing, with municipal science and technology agencies issuing a call for proposals on enabling technologies.

The top-down approach contrasts with the largely commercially driven activity underway in the U.S., ESPI noted, while Europe continues to focus on research and small-scale technology demonstrations.

“Beijing views space-based compute as the next frontier of its broader technology strategy: a way to produce advanced computing capabilities domestically and export them overseas — much like its U.S. counterparts — while positioning itself to help set the global standards and regulation for an entirely new industry before others get there first,” the report said.

“As China continues to expand its activities for ODCs at this pace, European actors should heed close attention or risk relinquishing space compute capabilities to the United States and China.”

Although Europe has supported several technologies relevant to orbital computing, it has yet to organize them around a large-scale deployment strategy. Commercial projects, including plans announced earlier this year by French startup ALATYR for robotically assembled ODCs, have also yet to match the scale seen elsewhere.

Meanwhile, U.S. ODC ventures are attracting sizable funding rounds. Starcloud and Cowboy Space are among the sector’s newest and youngest unicorns, each valued at more than $1 billion.

The first commercially viable ODC applications are likely to involve processing Earth observation data close to where it is collected, ESPI said, reducing the volume that must be transmitted to the ground to deliver intelligence faster.

According to the report, more ambitious uses, such as globally distributed computing networks and large-scale AI training envisioned by companies including SpaceX, remain more than a decade away.

Policy recommendations

ESPI called on the European Union to recognize ODCs as an emerging pillar of technological sovereignty and coordinate policy, investment and regulation around their development.

Its recommendations include:

• Establishing a flagship European ODC initiative under the EU’s 2028-2034 research program, alongside an expanded European Space Agency push into orbital computing beyond Earth observation and connectivity.
• For ESA and the EU to act as early customers by signaling demand and offering contracts for in-space data processing services.
• Set up a “European ODC Challenge” to support startups tackling the technology’s remaining feasibility barriers.
• Bring international policy and technical working groups together to help shape standards, regulation and data-sovereignty practices.

Europe can also learn from China’s playbook by combining policy drafting with industry implementation for ODCs, the report added.