France’s Performance and Trajectory in Dual-Use Technologies: 2025 Assessment

Executive Summary

France continues to position itself as a leading European player in dual-use technologies, leveraging a robust innovation ecosystem, strong public-private partnerships, and a strategic focus on digital sovereignty. This report assesses France’s current performance and future trajectory in five critical dual-use technology domains: artificial-intelligence, augmented-reality, cybersecurity, digital-twin-technology, and sensor-networks. It also analyses the contributions of notable French organisations, including Actility, I-Tracing, Mistral AI, Poolside AI, SURGAR, and Samp.

France’s strengths are evident in its AI talent pool, cybersecurity expertise, and growing digital twin and sensor network capabilities. However, challenges remain, notably in scaling innovation, bridging the gap between research and deployment, and competing with US and Chinese tech giants. The government’s sustained investment and regulatory support, coupled with a vibrant start-up scene, provide a solid foundation for future growth. France is well-placed to expand its influence in Europe and globally, but must address structural weaknesses and geopolitical risks to maintain its technological edge.

Strengths

Advanced Research Ecosystem

France boasts a world-class research infrastructure, with institutions such as INRIA, CNRS, and CEA driving innovation in artificial-intelligence, cybersecurity, and digital technologies. The presence of top-tier universities and grandes écoles ensures a steady pipeline of highly qualified engineers and scientists.

Thriving Start-up and Scale-up Landscape

Organisations like Mistral AI and Poolside AI exemplify France’s ability to nurture globally competitive AI start-ups. Actility leads in industrial IoT and sensor-networks, while I-Tracing is a key player in managed cybersecurity services. The French Tech initiative and Station F accelerator have helped create a supportive environment for technology entrepreneurship.

Governmental Support and Strategic Vision

The French government’s “France 2030” plan and the Defence Innovation Agency (AID) have prioritised dual-use technologies, with significant funding allocated to AI, quantum, and digital security. Regulatory frameworks emphasise digital sovereignty and data protection, aligning with broader EU strategies.

Strong Defence-Industry Linkages

French defence primes (e.g., Thales, Dassault, Safran) have integrated dual-use technologies into their R&D pipelines. Start-ups like SURGAR and Samp are increasingly involved in defence innovation, supported by dedicated procurement pathways and public-private partnerships.

European Leadership

France is a driving force in EU technology policy, shaping initiatives such as the European Defence Fund and GAIA-X. Its leadership in standards-setting and cross-border R&D consortia enhances its influence and market access.

Weaknesses

Scale and Global Reach

Despite a vibrant start-up scene, few French tech firms have achieved the scale of US or Chinese counterparts. Mistral AI and Poolside AI are notable exceptions, but overall, French firms face challenges in global expansion, particularly in the US and Asia-Pacific markets.

Fragmentation and Bureaucracy

The innovation ecosystem, while rich, remains fragmented. Start-ups often struggle to navigate complex funding mechanisms, regulatory hurdles, and procurement processes. Coordination between research, industry, and government can be inconsistent, slowing time-to-market for new technologies.

Talent Retention and Skills Gaps

France produces top AI and cybersecurity talent, but faces “brain drain” to the US and UK, where compensation and career opportunities are often greater. There is also a shortage of specialists in emerging fields such as digital-twin-technology and advanced sensor-networks.

Dependence on Non-European Tech Stacks

Although France champions digital sovereignty, many critical digital infrastructure components—cloud, chips, and some AI frameworks—are sourced from US or Asian providers. This dependency poses risks for both commercial and defence applications.

Limited Defence-Commercial Integration

While dual-use innovation is a policy priority, cultural and operational divides persist between the defence sector and commercial tech start-ups. Defence procurement cycles remain slow and risk-averse, limiting opportunities for agile, disruptive firms.

Notable Programmes & Investments

Artificial Intelligence

• Mistral AI: Founded in 2023, Mistral AI has rapidly become a European leader in large language models (LLMs) and generative AI. Its open-source models are widely adopted across government, defence, and industry. In 2024, it secured a €500 million Series C round, with strong backing from both French and European investors.
• Poolside AI: Specialises in AI-driven code generation and developer productivity tools, with applications in both civilian and defence software engineering. Poolside’s collaboration with the French Ministry of Defence on secure code generation for command-and-control systems is a notable example of dual-use AI deployment.
• National AI Strategy: The French government has allocated over €2 billion to AI R&D, with a focus on trustworthy, explainable AI for critical infrastructure and defence.

Augmented Reality

• SURGAR: A start-up at the intersection of AR and medical technologies, SURGAR is developing AR-assisted surgery platforms with potential defence applications in battlefield medicine and remote diagnostics.
• Defence AR Programmes: The DGA (Direction Générale de l’Armement) is funding AR-based training and simulation environments for the French Army, leveraging both start-ups and established defence contractors.

Cybersecurity

• I-Tracing: A leading managed security service provider (MSSP), I-Tracing delivers SOC, incident response, and threat intelligence services to major French enterprises and government agencies. It has expanded into OT/ICS security, critical for dual-use infrastructure.
• Cyber Campus: Launched in 2022, this Paris-based hub brings together over 120 cybersecurity firms, start-ups, and research labs, fostering collaboration and rapid response to emerging threats.

Digital Twin Technology

• Industrial Digital Twins: France is investing heavily in digital-twin-technology for aerospace, energy, and defence. Dassault Systèmes’ 3DEXPERIENCE platform is a global benchmark, used for simulating complex systems from fighter jets to nuclear plants.
• Smart City Initiatives: French cities such as Lyon and Nice are piloting urban digital twins for infrastructure management, disaster response, and security planning.

Sensor Networks

• Actility: A global leader in LoRaWAN-based IoT connectivity, Actility enables wide-area sensor-networks for smart cities, logistics, and critical infrastructure monitoring. Its technology is deployed in both civilian and military contexts.
• Defence Sensor Integration: The French Armed Forces are investing in distributed sensor networks for border surveillance, battlefield situational awareness, and autonomous systems.

Competitive Comparison

United States

The US remains the global leader in dual-use technology innovation, with unmatched scale, venture capital, and integration between Silicon Valley and the Pentagon. US firms dominate in artificial-intelligence, cloud, and advanced sensor-networks. However, France’s focus on digital sovereignty and ethical AI offers a differentiated value proposition, especially within Europe.

China

China’s state-driven approach has produced rapid advances in AI, IoT, and smart cities, with significant dual-use implications. Chinese firms enjoy vast domestic markets and strong government support, but face growing barriers to export and collaboration in Europe due to security concerns. France’s adherence to EU standards and transparency is a competitive advantage.

United Kingdom & Germany

The UK excels in cybersecurity and fintech, while Germany leads in industrial IoT and digital twins. France’s strengths in AI and system integration position it as a bridge between these two innovation models. Collaborative EU frameworks (e.g., GAIA-X, European Defence Fund) are levelling the playing field, but intra-European competition remains intense.

Israel & South Korea

Israel is a global cybersecurity powerhouse, with deep defence-tech integration. South Korea leads in smart manufacturing and sensor technologies. France is competitive in research and standards, but lags in commercialisation speed and start-up exits.

Opportunities for Collaboration / Export

European Partnerships

France is well-positioned to lead or co-lead EU-funded projects in AI, cybersecurity, and digital twins. Cross-border consortia involving Mistral AI, I-Tracing, and Actility can accelerate technology transfer and standardisation.

NATO and Allied Defence Markets

French dual-use technologies are increasingly attractive to NATO members seeking alternatives to US or Israeli suppliers. AR training systems, secure AI, and IoT-based sensor networks have strong export potential, particularly in Central and Eastern Europe.

Francophone Africa and Middle East

France’s historical ties and language advantages facilitate technology export to Africa and the Middle East. Smart city, energy, and security projects in these regions can leverage French solutions in sensor-networks and digital-twin-technology.

Public-Private Partnerships

Collaboration between start-ups (e.g., SURGAR, Poolside AI) and established defence primes can unlock new markets and accelerate dual-use technology adoption. The French Tech Export programme provides support for international expansion.

Academic and Research Alliances

Joint research with leading US, Canadian, and Asian universities can help retain top talent and access cutting-edge developments in AI, AR, and cybersecurity. France’s participation in Horizon Europe and other EU R&D frameworks remains a key asset.

Risks & Mitigation

Geopolitical and Regulatory Risks

• US-China Tech Rivalry: Escalating tensions may restrict access to key components (e.g., chips, cloud services) and limit export opportunities.
• EU Regulation: The upcoming AI Act and NIS2 Directive impose strict compliance requirements, potentially raising costs and slowing innovation.

Mitigation: Invest in domestic and European supply chains; actively shape EU regulatory frameworks; diversify export markets.

Talent Drain

• Brain Drain: Top engineers and researchers continue to be attracted by higher salaries and stock options in the US and UK.

Mitigation: Expand incentives for start-up equity, improve research funding, and create fast-track visas for international talent.

Cyber Threats

• Advanced Persistent Threats: State-sponsored cyberattacks target French critical infrastructure and dual-use technology firms.

Mitigation: Strengthen public-private information sharing, invest in next-generation SOCs (e.g., via I-Tracing), and enhance cyber resilience in supply chains.

Innovation Bottlenecks

• Slow Procurement: Defence acquisition processes remain risk-averse and slow, discouraging start-up participation.

Mitigation: Expand rapid prototyping and “defence sandbox” initiatives; streamline procurement for dual-use technologies.

Market Fragmentation

• Ecosystem Fragmentation: Lack of coordination between research, start-ups, and industry slows technology maturation.

Mitigation: Foster cluster-based innovation hubs (e.g., Cyber Campus); incentivise cross-sector partnerships.

Outlook (5-year)

Artificial Intelligence

France will consolidate its position as a European AI leader, with Mistral AI and Poolside AI scaling globally and influencing open-source AI standards. Government investment will focus on trustworthy, explainable AI for defence, healthcare, and critical infrastructure. The gap with US and Chinese AI giants will persist, but France’s ethical and regulatory leadership will attract international partners.

Augmented Reality

AR adoption in defence and healthcare will accelerate, driven by start-ups like SURGAR and increased investment in simulation and training. France will develop niche expertise in AR for complex, high-reliability environments. Integration with AI and digital twins will create new dual-use applications.

Cybersecurity

France’s cybersecurity sector, anchored by I-Tracing and the Cyber Campus, will remain robust. The country will play a leading role in shaping EU cybersecurity policy and standards. Growth in OT/ICS security and AI-driven threat detection will be key trends.

Digital Twin Technology

French firms will expand their leadership in digital-twin-technology for aerospace, energy, and smart cities. Integration with sensor networks and AI will enable real-time, predictive capabilities for both civilian and defence applications. Export opportunities will grow, especially in Europe and Francophone markets.

Sensor Networks

Actility and other IoT innovators will drive the deployment of large-scale sensor-networks for infrastructure monitoring, logistics, and defence. Advances in low-power, secure connectivity will underpin new applications in border security, environmental monitoring, and autonomous systems.

Policy and Ecosystem

France will continue to champion digital sovereignty and ethical technology development within the EU. Efforts to scale start-ups, retain talent, and integrate dual-use innovation across sectors will shape the next phase of growth. Strategic investments in quantum, edge computing, and AI chips will address supply chain vulnerabilities.

Risks and Uncertainties

Geopolitical tensions, regulatory shifts, and talent competition will remain persistent challenges. France’s ability to adapt its innovation ecosystem, streamline procurement, and foster international collaboration will determine its long-term competitiveness.

Conclusion:
France’s dual-use technology sector is entering a phase of maturity, with clear strengths in AI, cybersecurity, digital twins, and sensor networks. Continued investment, ecosystem integration, and international collaboration will be essential to sustain momentum and secure France’s position as a leading European—and increasingly global—technology power over the next five years.