Nasdaq-listed Nebius announced Wednesday that it signed agreements in the second quarter to expand the company's AI infrastructure network in Europe. The first phase of its Tallinn AI factory, with a capacity of 22 megawatts, is expected to begin operating later this year.

Nebius Head of Communications Tom Blackwell said Estonia was a natural choice for the company thanks to its world-class engineers, vibrant digital economy and startup culture, as well as its ambitious plans for both artificial intelligence and the transition to clean energy.

"Nebius' Tallinn AI factory, which is being developed in partnership with Greenergy Data Centers, will provide state-of-the-art infrastructure to support Estonia's growing innovation ecosystem and help accelerate the development and adoption of artificial intelligence," he said.

Nebius' global capacity network has expanded rapidly. In Europe, the company is developing large-scale AI factories in Lappeenranta, Finland, and Béthune, France. It also has an operating center in Mäntsälä, Finland, as well as AI infrastructure projects in the United Kingdom, Spain and Iceland. Nebius' major customers include Microsoft and Meta.

Greenergy Data Centers CEO Kert Evert said Nebius' decision to choose Greenergy shows that Estonia is emerging as a competitive destination for large-scale AI infrastructure projects.

Blackwell said Nebius wants to work closely with the Estonian government, businesses and universities to develop AI skills, broaden access to artificial intelligence capabilities and strengthen Estonia's position as a leading hub for AI innovation.

Martin Salo, co-founder of Tensor Estate, a group of Estonian entrepreneurs that became a shareholder in Greenergy Data Centers last month, said the newly announced project is the first phase of a larger development that will make Estonia one of the international hubs for AI infrastructure in the coming years.

"Until now, Northern Europe's major AI factories have been concentrated primarily in Finland, Sweden and Norway, thanks to favorable electricity prices, renewable energy and a suitable climate. Having the Baltics' first AI factory come here means Estonia is joining the club of countries where the world's leading AI companies are building their infrastructure," Salo said.

In late July, Greenergy Data Centers' Head of Hyperscale Martin Rungi told ERR that attracting one major international customer to Estonia would make it significantly easier for data centers to secure additional customers, as the market develops after the first breakthrough.

In Nebius' case, however, the question of its ties to Russian technology company Yandex cannot be overlooked, as Nebius emerged after Yandex came under sanctions following Russia's full-scale invasion of Ukraine.

In 2024, the company sold its Russian business units and changed its name to Nebius Group, which is headquartered in the Netherlands. Nebius CEO Arkady Volozh is also a co-founder of Yandex, but has since renounced his Russian citizenship.

A Greenergy representative said last month that such labeling was inappropriate, arguing that Nebius is probably one of the most thoroughly vetted organizations, given that despite its former ties to Russia, it has earned the trust of Meta, Microsoft, Nvidia, the U.S. government and the New York Stock Exchange.

Economy minister: We have consulted security agencies

As government agencies have had concerns about Nebius and the workforce at the AI factory set to operate in Hüüru, Estonian security agencies have been consulted, Minister of Economic Affairs and Industry Erkki Keldo said.

"On the one hand, cutting-edge investments like these /.../ are certainly very welcome in Estonia, but on the other hand, the government has an obligation to look at the broader security picture. So yes, we are aware of the background, we are also in contact with Estonian authorities and will certainly minimize the risks," he said, adding that it is very important to understand that the factory is purely a private investment.

If questions arise about a company's background or workforce, there are rules and security agencies in place, and those agencies have also informed the public about potential risks and threats, the minister noted.

"We certainly have to ensure that any sensitive data, sensitive sectors and sensitive technologies do not, for example, fall into the hands of high-risk countries. And when using different types of data, we have to pay attention to whose technology we are using and where we use and store data, to ensure that it is protected. That is certainly what we are doing," Keldo said.

According to Keldo, Nebius was also discussed at a Cabinet meeting on Thursday and discussions on the matter will continue in the coming weeks.

"Estonian businesses need to understand these potential risks, including the company itself and that people with Russian backgrounds and Russian contacts are not welcomed here with overly open arms. We are certainly somewhat more vigilant about this than perhaps other European countries are, and that will remain the case in the future," Keldo said.

The article was updated to add comments from Minister Erkki Keldo.

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