AI Made in Germany

Experts agree that artificial intelligence (AI) will be one of the major technologies of the future. But AI is no longer just something from Silicon Valley. Germany is emerging as the ideal location for providers in Europe.

June 2022

How much maternity leave am I entitled to? And how do I apply for it? These are the kind of questions employees at multinational conglomerate Siemens entrust to Carl. The friendly chatbot, who speaks five languages, answers their most important HR questions around the clock. And if he doesn’t know the answer, he helpfully provides an internal contact who might.

Nowhere is Carl more popular than in HR, since he saves his human colleagues hours of time answering standard inquiries. That’s why he is used worldwide. Carl was developed in Munich by IBM, which operates its own artificial intelligence (AI) development center there. In 2017, the US company invested around EUR 200 million in the IBM Watson Center Munich to develop tailor-made AI solutions for customers.

This year, construction begins on the site of AI Innovation Park Baden-Württemberg in Heilbronn. The world-class artificial intelligence hub is funded by the state © Manuel Schönfeld – stock.adobe.com

Chatbot Carl is just one example of how AI can make day-to-day life in companies easier. The areas of application for AI technologies are becoming more diverse by the hour. From HR to inventory to assembly lines, many companies already rely on AI to get run-of-the-mill jobs done. Germany is a pioneer in this burgeoning field – in terms of both innovative AI providers and demand from large manufacturers.

The Bottom Line

From HR to assembly line, the possibilities of AI are almost endless. Germany offers numerous advantages to foreign companies as a location for AI development and sales.

The advantage of strict standards

In April 2021, Germany’s digital trade association Bitkom surveyed more than 600 companies about the current and future use of AI technology. While only around 8 percent of companies in Germany were using AI at the time, the trend is an upward one. More than two-thirds of German companies surveyed said that AI is the most important technology of the future. And the proportion of companies that are actively planning to use it, or discussing deployment, has risen by eight percentage points to 30 percent.

Germany is an extremely attractive location for foreign AI companies right now, says Wolfgang Rodler, head of the IBM Client Center in Munich. The main selling point is proximity to a large number of potential customers, as evidenced by IBM’s portfolio. As well as Siemens, the company has provided solutions for the German Aerospace Center. On average, the IBM Client Center welcomes 500 groups of potential new clients a year.

5BN

Amount the German government is investing between 2018 and 2025 to make the country a competitive location for AI technology
Source: BMBF

Several universities are deeply involved in künstliche Intelligenz (KI), as it’s called in Germany, and the academic scene supports the private sector, not only with research cooperation but also by turning out highly employable IT talent.

“There is hardly any other area that relies as heavily on company data as AI,” explains Rodler. “The technology only works properly in the extended application.”

The legal and political framework in Germany also supports the entry of AI companies into the wider market. The country’s strict data protection regulations are actually more of a help than a hindrance for developers, argues Rodler, because it means AI developed in Germany will fulfill or exceed the standards of almost every other country in the world.

“Removing a data backup solution from a product because it is not needed in a country is much easier than adding a new technology,” Rodler says.

Intelligent Solutions from the South

In July 2021, the champagne corks were popping in Heilbronn. The southwestern German city was awarded the state project AI Innovation Park Baden-Württemberg. A state-of-the-art AI campus will be built on a 23-hectare site in the south of the city by 2026, with the goal of establishing an ideal AI ecosystem. It will include an innovation center for start-ups with coworking spaces and a range of services and advice for corporate development. A Gaia-X data center will supply the necessary networking and computing power on the new campus. The consortium behind the project is investing around EUR 70 million, with another EUR 50 million coming from the regional state of Baden-Württemberg. Heilbronn University of Applied Sciences, which began offering AI courses last year, is also supporting the project. The campus hopes to attract both national and international companies, start-ups, research institutions and investors by creating an optimal environment for innovation in the field.

Useful ecosystems

Vera Demary from the economic research institute IW underlines a fourth advantage: German entrepreneurship.

“There is a lively start-up scene in Germany, for example in Berlin, Munich or in the Ruhr area, where foreign AI developers will find functioning ecosystems and can quickly join networks,” she says. “Local AI start-ups know the market. They know about computing or research centers, and they know the funding landscape. Foreign companies can quickly establish contact with customers, associations or authorities.”

Germany’s Ministry of Education and Research is doing its part to ensure that the country continues to develop as a premium AI sales and development location. In September 2021, the ministry announced a huge fund for the construction of AI service centers that doles out up to EUR 10 million per project.

These new computing power centers will support research institutions and private enterprises to develop intelligent, self-learning software and integrate it into their projects. Overseas companies setting up shop in Germany can use these data centers and avoid the substantial upfront costs of having to invest in their own digital infrastructure.

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