Cyprus will launch its first AI Factory in the immediate future and is advancing creation of a national supercomputer in partnership with an American technology giant, President Nicos Christodoulides announced on Wednesday, positioning the country at the forefront of artificial intelligence and high-performance computing in the Eastern Mediterranean.
The initiatives form part of a comprehensive digital transformation agenda that includes introduction of more than 100 new digital services in 2026, upgraded citizen-facing platforms, and enhanced protection for children using social media.
“Regarding artificial intelligence, an action plan is being implemented, and in the immediate future, the first Cypriot AI Factory is being launched, providing access to supercomputing infrastructure,” Christodoulides said during his annual governance planning address at the Presidential Palace. “Simultaneously, creation of a national supercomputer is being promoted in cooperation with an American giant.”
The announcements reflect Cyprus’s ambition to establish itself as a regional hub for technology, innovation and entrepreneurship – a strategy that has already yielded significant results. Christodoulides noted the country ranks first in Southern Europe and 15th globally in innovation and entrepreneurship metrics, whilst holding first place in the European Union on taxation matters and second place regarding entrepreneurship incentives for innovative companies.
AI Factory to provide supercomputing access
The AI Factory concept represents a new model for democratising access to advanced computing resources, enabling researchers, businesses and developers to leverage high-performance infrastructure for artificial intelligence applications without requiring massive individual investments in hardware.
The facility will provide access to supercomputing capabilities essential for training large-scale machine learning models, processing vast datasets, and developing sophisticated AI applications across sectors including healthcare, finance, logistics, environmental monitoring and scientific research.
By lowering barriers to entry for AI development, the AI Factory aims to catalyse innovation across Cyprus’s economy, supporting both established companies seeking to integrate AI capabilities and start-ups building AI-native products and services. The infrastructure will be particularly valuable for small and medium-sized enterprises that cannot justify building their own supercomputing facilities.
The government is promoting establishment of a Business Development Organisation to support and finance entrepreneurship and innovation, with emphasis on small and medium-sized and start-up enterprises. The AI Factory aligns with this broader strategy by providing critical technological infrastructure that can accelerate business development in high-value sectors.
National supercomputer partnership
The national supercomputer project, being developed in cooperation with an American technology giant, represents a more substantial long-term investment in high-performance computing infrastructure. Whilst the government did not specify which company is involved, major American technology firms have been increasingly active in establishing partnerships with national governments for supercomputing initiatives.
A national supercomputer would serve multiple purposes beyond AI development, including climate modelling, genomic research, materials science, cybersecurity applications, and complex economic simulations. High-performance computing capabilities have become essential infrastructure for countries seeking to compete in the knowledge economy and address complex challenges requiring massive computational power.
The supercomputer project reflects Cyprus’s strategic positioning within international technology networks. Cyprus has been actively cultivating relationships with major technology companies, with Christodoulides referencing meetings in the United States that have already produced tangible results. Following those meetings, the president said the government will “continue in 2026 the strategy of strengthening Cyprus as a regional hub for Technology, Innovation and Entrepreneurship.”
Cyprus currently holds first place in the European Union on taxation matters and second place regarding entrepreneurship incentives for innovative companies, according to government data. This favourable business environment has attracted technology firms and investors, creating momentum that the AI and supercomputing initiatives aim to accelerate.
Digital services
The AI and supercomputing announcements form part of a broader digital transformation encompassing government services and public administration. More than 100 new digital services will be introduced in 2026, building on significant services already offered digitally.
New information systems will be implemented in the Social Insurance Department, Road Transport Department and Police, modernising operations across key government functions. These systems will incorporate advanced technologies including potentially AI-powered features for improved efficiency and citizen experience.
The Digital Citizen application, currently serving more than 135,000 citizens, is being upgraded to include new services such as purchasing tickets for sporting events and child identity features. The platform represents the government’s vision for unified digital access to public services, reducing bureaucracy and improving convenience for citizens.
The digital transformation aligns with Cyprus’s preparations for assuming the EU Council Presidency in the second half of 2026. The country will leverage this institutional opportunity to showcase its digital governance capabilities whilst potentially influencing European digital policy directions.
Protecting children online
Alongside advancing AI capabilities, the government is addressing concerns about safe use of social media by children, which Christodoulides said “justifiably concerns society and government.”
The government is proceeding with preparation of an action plan in cooperation with European Union partners to utilise age verification applications to protect children online. This initiative responds to growing awareness of risks associated with children’s social media use, including exposure to inappropriate content, cyberbullying, privacy violations, and mental health impacts.
Age verification technologies represent a technically and politically complex domain, requiring balance between protecting children, respecting privacy rights, and maintaining feasible compliance requirements for platforms. Cyprus’s approach through EU cooperation suggests emphasis on harmonised standards rather than isolated national measures.
The children’s online safety initiative demonstrates recognition that digital transformation must address not only opportunities but also risks and challenges. As Cyprus advances its AI capabilities and digital infrastructure, parallel attention to digital safety, security and ethics becomes increasingly important.
Innovation ecosystem development
The AI Factory and supercomputer initiatives operate within a comprehensive strategy to strengthen Cyprus’s innovation ecosystem. The country has achieved notable rankings in innovation metrics, but sustaining and building on this success requires continued investment in infrastructure, talent development and enabling policies.
Beyond hardware infrastructure, successful AI development requires skilled workforce, supportive regulatory frameworks, access to data, and collaborative networks connecting researchers, entrepreneurs, investors and established companies. The government’s approach encompasses multiple elements of this ecosystem.
State modernisation efforts include comprehensive redesign of Land Registry procedures, accelerating examination of applications through electronic submission. A new legislative framework is being promoted for rational utilisation of state land, based on transparency and equal treatment principles, with open tender procedures introduced for properties of high commercial value.
Urban and spatial planning is being modernised through revision of local plans for major cities, publication of the first revised chapter of the Policy Statement, and preparation of pilot urban land consolidation schemes. A new simplified fee calculation system for building permits will reduce examination times, with fast-track licensing extended to listed buildings.
These administrative modernisations create a more efficient environment for business operations and investment, complementing technological infrastructure development.
Regional technology ambitions
Cyprus’s technology strategy emphasises positioning as a regional hub serving the Eastern Mediterranean, Middle East and North Africa. The country’s location, EU membership, favourable business environment, and increasingly sophisticated infrastructure create potential for serving as a technology gateway between Europe, Asia and Africa.
The government announced decisions to create a modern supply chain network operating in synergy with ports and airports, with special supply and storage zones planned for Larnaca and Paphos airports. This positions Cyprus as a strategic partner in the India-Middle East-Europe corridor (IMEC) and strengthens its role as Europe’s entry point for Asian and African markets.
Whilst supply chain infrastructure primarily serves physical goods movement, the parallel development of digital infrastructure and AI capabilities creates potential for Cyprus to serve as a data and computing hub alongside its physical logistics role. High-performance computing facilities require substantial power and cooling infrastructure but can operate effectively in various geographic locations, making Cyprus’s strategic position potentially advantageous.
Cybersecurity and data protection
Advanced digital infrastructure and AI capabilities carry cybersecurity implications requiring corresponding defensive measures. The government announced creation of a National Mechanism for Screening Foreign Direct Investment within 2026, aimed at enhancing transparency and national security.
Whilst this mechanism primarily addresses investment screening, it reflects broader attention to security considerations in an increasingly digital economy. Cybersecurity will be essential for protecting critical infrastructure including the planned supercomputer, government information systems, and energy sector digital infrastructure.
Cyprus has been strengthening its credibility internationally on governance and rule of law matters, as evidenced by recent reports from GRECO and the European Union on the Rule of Law, which the government approaches as a guiding framework for implementing necessary reforms. Strong governance and legal frameworks provide foundation for trustworthy digital infrastructure and AI applications.
The government is proceeding with upgrading the Internal Audit Service following reforms in the Legal Service and Audit Office. Enhanced internal controls and accountability mechanisms become increasingly important as government operations become more digitised and incorporate AI-powered decision support systems.
Talent development and education
Successful AI and supercomputing initiatives require skilled workforce capable of developing, deploying and maintaining sophisticated technologies. The government’s education agenda includes measures to build relevant capabilities.
A bill on special education will be submitted in 2026, following consultation, to make schools more inclusive and offer better services based on all children’s needs. At the curriculum level, emphasis is being placed on cultivating modern skills including proper management of artificial intelligence and development of critical thinking.
Technical and vocational education is being upgraded, with expansion of the technical gymnasium beyond Nicosia and Limassol to Paphos and free Famagusta. The innovation of the technical gymnasium and the reintroduction, after 13 years, of work experience weeks strengthen the link between education and the labour market – potentially valuable for building technology sector talent pipelines.
At tertiary level, student grants are being modernised, with the budget increased to €62m, expanding beneficiaries and abolishing income and property criteria for families with five or more dependent children. Enhanced support for higher education can facilitate development of advanced technical skills needed for AI and computing sectors.
Economic impact and competitiveness
The AI and supercomputing initiatives carry potential economic impacts beyond direct technology sector development. AI applications span virtually all economic sectors, from agriculture and manufacturing to financial services and tourism. High-performance computing capabilities enable sophisticated modelling and optimisation across domains.
Cyprus’s economic strategy emphasises maintaining a strong and resilient economy as the driving force for implementing government policies. The year 2026 began with implementation of tax reform, described as “one of the most emblematic reforms of recent decades,” resulting in reduced tax burden and increased disposable income.
The government is proceeding with pension system reform, submitting legislation for “better and more dignified pensions in a simple, substantial and sustainable way.” These economic foundations create fiscal space for strategic investments including technology infrastructure.
Procedures for privatisation of the Cyprus Stock Exchange will advance within 2026, potentially enhancing international competitiveness and small and medium-sized enterprises’ access to alternative financing sources. A modernised stock exchange could facilitate capital raising for technology companies and infrastructure projects.
International partnerships and cooperation
The national supercomputer partnership with an American technology giant exemplifies Cyprus’s strategy of cultivating relationships with leading international firms and institutions. Following Christodoulides’s meetings in the United States, which officials say produced tangible results, the government continues pursuing strategic partnerships that can accelerate technology transfer and capability development.
Cyprus will deepen relations with countries of special interest in 2026, including India and Central Asian states. The president announced he will visit India in May at the invitation of the Indian Prime Minister. India’s advanced technology sector and growing digital economy make it a potentially valuable partner for AI and computing cooperation.
EU cooperation remains central to Cyprus’s digital strategy, with the country preparing to assume the Council Presidency. The children’s online safety initiative demonstrates commitment to working within European frameworks rather than pursuing isolated national approaches. Cyprus may seek to advance European digital and AI policy discussions during its presidency term.
Research and development applications
The AI Factory and national supercomputer will enable research applications across scientific domains. Cyprus’s universities and research institutions will gain access to computing capabilities previously unavailable domestically, potentially enhancing research productivity and international competitiveness.
Climate modelling represents one potentially significant application area, given Cyprus’s position in one of the most climatically vulnerable regions of the planet. High-performance computing enables detailed climate projections, weather forecasting, and analysis of adaptation strategies.
The government is implementing an early warning system for natural disasters, with full operation targeted for 2026. Supercomputing capabilities could enhance such systems through improved forecasting and risk modelling. Within the framework of the Cypriot EU Presidency, a strategy for water resilience is being promoted – another domain where advanced computing can support analysis and planning.
Healthcare applications of AI and high-performance computing include drug discovery, genomic analysis, personalised medicine, and disease modelling. Cyprus is implementing a healthcare development programme worth €145m for substantial improvement of public hospitals across all provinces, creating potential for integration of advanced technologies into healthcare delivery.
Implementation timeline and next steps
The AI Factory is described as launching “in the immediate future,” suggesting operational capability within months rather than years. This rapid timeline indicates that foundational work has already been completed, with the announcement marking public unveiling rather than project initiation.
The national supercomputer timeline is less specific, described as “being promoted” in cooperation with an American partner. Major supercomputing facilities typically require substantial planning, procurement, construction and commissioning phases, suggesting a multi-year timeline before full operational capability.
The 100+ new digital services scheduled for introduction in 2026 represent more immediate deliverables, with implementation presumably at various stages for different services. New information systems in Social Insurance, Road Transport and Police departments suggest major projects with significant complexity and stakeholder coordination requirements.
The Digital Citizen application upgrades including sports tickets and child identity features represent more incremental enhancements to an existing platform, likely achievable within the 2026 timeframe with existing development resources.
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