Mistral AI teams up with ASML to raise €1.7 billion

French AI startup Mistral AI has just secured a massive €1.7 billion ($2 billion) funding round with Dutch chip equipment manufacturer ASML taking the lead. I’m watching this deal closely, as it represents a significant power move in Europe’s attempt to challenge American AI dominance.

ASML poured in €1.3 billion, claiming an 11% stake and becoming Mistral’s largest shareholder. This catapults Mistral’s valuation to a staggering €11.7 billion, crowning it Europe’s most valuable AI firm. Pretty impressive for a company founded by ex-Google DeepMind and Meta researchers.

What strikes me about this partnership is how deliberately European it feels. While American giants like OpenAI, Google, and Meta dominate headlines, Mistral is positioning itself as Europe’s homegrown champion. Their CEO Arthur Mensch has been vocal about developing reasoning models specifically optimized for European languages - a clever differentiation strategy in my view.

France’s government seems all-in on this bet too. President Macron has publicly urged French citizens to download Mistral’s chatbot “Le Chat” instead of ChatGPT. The app hit 1 million downloads within two weeks of launch - not bad, though still dwarfed by American competitors.

The industrial rationale makes sense. ASML, which makes the advanced lithography machines essential for chip production, could integrate Mistral’s AI models across its semiconductor equipment portfolio. They’ve even appointed former French Finance Minister Bruno Le Maire as an advisor, strengthening their French connections.

Other investors joining this round include DST Global, Andreessen Horowitz, General Catalyst, Index Ventures, Bpifrance, Lightspeed, and Nvidia. The latter’s participation is particularly interesting given their dominant position in AI hardware.

Mistral recently upgraded Le Chat with memory capabilities and advanced image editing, inching closer to feature parity with American rivals. But I wonder if these improvements are enough to truly challenge OpenAI’s market position.

This funding represents Europe’s most serious attempt yet to establish AI sovereignty. But the question remains: can even €1.7 billion close the gap with American tech giants who’ve had years of head start and vastly more resources? I’m skeptical, but at least now there’s a genuine European contender in the race.