Finland has been very successful in attracting global data center investments. This strengthens our digital infrastructure, but it is not enough on its own to guarantee future well-being. Digia´s Senior Vice President, Sami Paihonen, explains how Finland and Finnish organizations can rise from being an infrastructure provider to a value creator in the AI value chain.
In recent years, Finland has celebrated significant investment news. Microsoft and Google have invested billions in constructing data centers in Hamina, Vihti, and Kirkkonummi.
This is great, as it generates work during construction, raises tax revenue, and utilizes our stable electricity network and waste heat recovery.
However, if we take a closer look at the anatomy of the AI revolution (Figure 1: Investing Visuals, The AI Layers), we see the risk.
Data centers represent level 3 of the value chain. It is a vital floor, the "engine room", but it is only the beginning.
If we are content to be merely a platform for others' intellect, we will miss a historic opportunity for a leap in productivity and wealth creation.
The chart below from Investing Visuals divides the AI economy into six layers.
Finland's current success story is strongly placed on levels 1 Power and 3 Data centers. We have clean energy and a secure foundation for our servers.
The problem is macroeconomic. A data center is a capital-intensive investment, not a labor-intensive one. When the "concrete has dried," and the servers are humming, the employment effect is moderate locally. The value-added flows to tech giants that own Level 4 AI Models and Level 5 Software platforms.
Finland must strategically aim for the upper end of the chart: Level 5 Platforms and Level 6 AI applications and agents. Why?
1. Scalability and GDP: GDP growth in a declining demographic requires that one hour worked generate more value. The productivity of a data center administrator is constant. On the other hand, a globally scalable AI application (Level 6) or an industrial platform (Level 5) developed by a Finnish engineer can produce exponential value without increasing the consumption of raw materials.
2. Added value: We should not only store data, but also refine it. Finland has world-class engineering expertise. It is a waste to use this know-how only to "connect cables" when we could build the applications that those cables run.
Finland has all the prerequisites to rise from a mere infrastructure provider (host) to a value creator. Below are three examples.
1. In the public sector, the transition from bureaucracy to AI agents
Finland's public data is of the highest quality globally. We shouldn't just store it in data centers, but build Level 6 applications that make public administration more efficient.
Imagine a "Kela agent" or a "Tax Administration bot" that automates routines. This frees up resources for care and education – a direct remedy for the sustainability gap.
2. Industrial AI widely adopted in the private sector
We may not be building a competitor to ChatGPT (Level 4 AI Models), as it requires billions of computing resources, but we can be the best in the world at applying these models.
The Finnish manufacturing industry (e.g., Kone, Wärtsilä, Valmet) can develop Level 6 applications that enable machines to become autonomous and maintenance to be proactive. This is a high-margin export product, unlike the sale of electricity to server halls.
3. More intellectual capital and startups
To move up the value chain, we need investments in R&D. Data centers do not create intellectual property rights (IPR), whereas software development does.
From the perspective of economic growth, it is crucial that companies in Finland develop their own technology and own the rights to it, rather than merely renting space for others.
It's great that Finland is an attractive destination for data centers. They create a digital backbone. However, from the perspective of the national economy, they are merely the foundation.
If we remain at level 3, we will be a supplier of raw materials for the digital age – the "forest of Europe", from which logs are exported for processing elsewhere. By rising to levels 5 and 6, we become a high-tech processor.
We have electricity, and we have walls. Now we need to ensure that we also have the intelligence that will drive the prosperity of the next decade.