HPC SMEs in Europe: a Strategic Enabler

This white paper addresses the critical role of Small and Medium-sized Enterprises (SMEs) in Europe's High-Performance Computing (HPC) ecosystem and their contribution to European technological sovereignty. Commissioned under the Strategic Research Agenda 6 (SRA6) framework, it provides comprehensive analysis and policy guidance to ensure that European HPC and AI-focused SMEs are not only visible but central in shaping and delivering on the EU's digital, industrial, and green transition strategies. The paper distinguishes between HPC Technology SMEs (developers of HPC hardware, software, and services) and HPC User SMEs (companies leveraging HPC for business solutions), recognizing their symbiotic relationship and collective importance to Europe's economic and technological competitiveness. Key Messages for Policymakers, EuroHPC, and SMEs SMEs are essential to European HPC sovereignty. The success of the EuroHPC initiative relies not only on supercomputer infrastructure (such as JUPITER or LEONARDO) but critically on the ecosystem that builds, optimizes, and utilizes them. SMEs provide niche innovation, agility, and technological autonomy over key components that large multinational corporations cannot or will not provide. Current barriers are systemic and urgent. European HPC SMEs face significant structural challenges: limited access to funding and markets, complex procurement processes favouring large vendors, fragmented regulatory frameworks across Member States, insufficient IP protection, skills gaps, and disadvantages in administrative capacity compared to larger organizations. Innovation potential is being underutilized. SMEs drive innovation in AI, quantum computing, and industrial digital twins. They account for approximately 99% of European businesses and employ over 80 million people, yet their capabilities remain insufficiently integrated into strategic HPC initiatives. Without targeted support, Europe risks losing these innovative capabilities to international competition. Policy reform is necessary and achievable. This paper demonstrates that with adapted programme design, simplified access mechanisms, procurement reform, and targeted support for critical enablers, European SMEs can significantly strengthen Europe's technological sovereignty in HPC and AI. The recent AI Factory tenders show promising movement, but participation must go beyond token involvement to meaningful roles in technological solutions and budget allocation. Summary of Strategic Recommendations This white paper presents comprehensive, actionable recommendations across five strategic areas: 1. Simplified Programme Access: Create dedicated SME access tracks for EuroHPC and Horizon Europe with streamlined proposal and reporting procedures, mentoring mechanisms, and recognition that SMEs cannot compete on equal administrative terms with large research organizations. 2. Adapted Funding Models: Implement 100% reimbursement rates for SME-specific calls, flexible rules on minimum contributions, and explicit support for critical prototyping activities including EDA tools and tape-outs—essential stepping stones for demonstrating innovation in HPC and semiconductor technologies. 3. Procurement Reform: Establish clear expectations for significant SME participation in public procurement beyond marginal involvement. SMEs should hold central roles in technological solutions with meaningful presence in both project activities and budget allocation, particularly in AI Factories and exascale systems. 4. Regulatory Harmonization: Harmonize R&I tax incentives across Member States, streamline IP protection procedures, establish clear rules for cross-border data usage and export control, and reduce legal and administrative overhead that currently disadvantages SMEs relative to international competitors. 5. Talent Pipeline Development: Expand programmes like EUMaster4HPC with increased SME collaboration, simplify administrative and financial processes for SME internships, strengthen connections with National Competence Centres (NCCs), and foster learning networks that enable SMEs to build and retain specialised talent. Vision for the Future With the right policy framework and support mechanisms, European HPC SMEs can become global leaders in specialised technologies, contributing decisively to Europe's technological sovereignty. This requires recognition that empowering SMEs is not merely a matter of fairness but a prerequisite for Europe to achieve strategic autonomy in HPC and AI. Without a stronger role for SMEs, Europe will remain dependent on external providers; with appropriate support, European SMEs can deliver the disruptive innovation that will make Europe stronger, more competitive, and strategically autonomous in the post-exascale era.