IBM (NYSE: IBM) is teaming with researchers at a Swiss university, SAP and Cray to simulate how toe human brain works in a project to be supported by the European Union.

The project is one of two selected in a competition by the EU for government support. The winners were declared Monday.

The other university-led research project will investigate graphene.

Researchers at the Ecole Polytechnique Federale of Lausanne, Switzerland will lead the brain project.

The projects were selected from four finalists that been chosen from 26 proposals.

“European’s position as a knowledge superpower depends on thinking the unthinkable and exploiting the best ideas,” European Commission Vice President Neelie Kroes said in a statement. “This multi-billion competition rewards home-grown scientific breakthroughs and shows that when we are ambitious we can develop the best research in Europe.”

The Human Brain Project will use supercomputers to create the most detailed model of the human brain to date, then simulate drugs and treatments for neurological diseases and related ailments.

IBM, which has led the U.S. in patent awards for 20 years, is also the developer of the supercomputer “Watson,” which defeated human players in the TV show “Jeopardy” and also is being used increasingly in medical research.

“The pharmaceutical industry won’t do this, computing companies won’t do this — there’s too much fundamental science,” said Henry Markram, a professor of neuroscience at the Ecole Polytechnique Federale of Lausanne, earlier this year. “This is one project which absolutely needs public funding.”

The other project will investigate the possible uses of graphene, the thinnest known material, which conducts electricity far better than copper, is at least 100 times stronger than steel, and has unique optical properties. Important future uses include the development of fast, flexible and strong consumer electronics, bendable personal communication devises, lighter airplanes and artificial retinas.

The project will be led by Prof. Jari Kinaret of the Chalmers University of Technology in Goteborg, Sweden.

Each of the projects — called “flagships” by the contest organizers — will receive up to €54 million ($73 million) from the European Commission, with the rest of the money coming from national governments and other sources.

“There will be careful monitoring during the lifetime of the projects so that the flagships continue to be an efficient use of taxpayers’ money,” the commission said in a statement.

IBM employs some 10,000 people across North Carolina.

[IBM ARCHIVE: Check out a decade of IBM stories as reported in WRAL Tech Wire.]

(Bloomberg contributed to this report.)