Big Thing in Small

One up-and-coming industry attracting the attention of international companies is micro/nano engineering. A cluster has coalesced in the eastern German state of Thuringia, a part of the country best known for its excellence in optics.

July 2021

Within Germany, Thuringia is most often associated with the iconic German optics companies Zeiss and Jenoptik. But the number of foreign firms doing business in that part of eastern Germany is also on the rise, increasing by 41 percent between 2016 and this year, and not all of them are involved in the region’s traditional industry. More and more micro/nano technology enterprises are also choosing to set up shop here.

Japanese companies are particularly prominent. For example, in 2017, Japan’s KOA Corporation acquired VIA Electronic, a small but top-notch maker of Low Temperature Co-fired Ceramics (LTCC). LTCC facilitates the carrying and packaging of the smallest sort of electronic components like sensors and is therefore of key interest for the electronics supply chain.

The Japanese-German team of KOA/VIA Electronic © VIA, Pressefoto

KOA is now part of the Thuringian micro/nano technology cluster. “I was looking for a successor to bring VIA into the future and to inject enough capital to buy important new machinery,” says Franz Bechtold, VIA’s founder and now comanaging director. “Since KOA’s entry, we acquired a CNC punching machine, a lamination press and upgraded our clean room. There are no doubts as to our Japanese owners’ strategic commitment here.”

VIA’s other managing director, Yuji Iwasa, says KOA’s move came in recognition of the fact that Europe constitutes the most promising market for LTCC. “Our business is very customer-­oriented, requiring detailed technical communication, and our investment in Thuringia caters to these needs,” Iwasa explains.

The Bottom Line

Optics and photonics is a fast-growing and exciting, future-oriented sector in Germany with lots of room for foreign companies.

Center of R&D expertise

It’s easy to see why German and foreign companies in micro/nano manufacturing would be attracted to Thuringia, with its world-class R&D ecosystem. There are twenty research institutes within a 60-kilometer radius, including the Fraunhofer Institute for Applied Optics and Precision Engineering and the Ilmenau University of Technology.

Research carried out at that university and at Micro-Hybrid Electronic GmbH, a Thuringian specialist for miniaturized electronic circuits and infrared sensors, is a key element of the EUV (Extreme Ultraviolet) lithography technology that won the prestigious German Future Prize last November. The technology is predicted to revolutionize computer chip production.

“EUV lithography represents a giant leap forward for the chip packaging industry, as it will enable the likes of Apple to achieve enormous breakthroughs in audiovisual displays,” says Knuth Baumgärtel, Micro-Hybrid’s managing director. “The Thuringia cluster allows small and medium-sized companies like us to test prototypes in the local research institutions’ clean rooms, which would otherwise require initial investments of EUR 20 million or more.”


Radius of Thuringia’s micro/nano cluster, which encompasses twenty research institutes and boasts top-notch R&D


Share of all goods made in Thuringia that are exported


Share of the population with higher degrees in the Thuringian city of Jena, a world center of the optical industry

Finding a spot in Thuringia

Foreign businesses interested in coming to Thuringia can get free help from Germany Trade & Invest (GTAI) and the Thuringia regional economic development agency LEG. There are investment subsidies of up to 30 percent, loan guarantees of up to 80 percent and subsidies for wages, training and R&D.

Nevertheless, LEG sees the micro/nano cluster itself being the strongest selling point for international business managers. “Thuringia’s biggest-ever FDI project, the EUR 1.8 billion battery factory currently being built by China’s CATL near Erfurt, is mainly about investors seeking to tap into the cluster’s expertise to improve manufacturing processes, rather than incentive programs or geographic proximity to the target markets,” says Arnulf Wulff, a member of the LEG board.

Silke Poppe, head of the Eastern German States/Structural Change division at GTAI, explains that Germany’s national economic development agency has been actively supporting investor recruitment in Thuringia, with measures including a cluster marketing program and foreign delegation visits. “Companies taking part in our delegation visits can gain a firsthand impression of available locations and business opportunities,” she says.

© Getty Images, Monty Rakusen

On the Ground

Japanese systems integration corporation NTT DATA set up a software arm in Erfurt to meet the demand for sensorics in Europe

The automotive industry’s quest to make autonomous driving a new standard means that carmakers will require a new generation of sensorics, including the operational software linking them with 5G base stations.

Since 2019, the Japanese multinational systems integration company NTT DATA, an IT services and business consulting provider, has been setting up a center for software development in Erfurt, the heart of Thuringia’s micro/nano cluster. NTT DATA plans to increase staff there from 15 to 25 by the end of 2021. All but one of the current 15 employees are homegrown Thuringian talent.

“The swift progress in micro/nano technologies illustrates the need to adopt supporting IT development in faster cycles, and this is exactly what our Erfurt presence is about,” says Ralf Malter, managing director of NTT DATA’s Erfurt office. “We benefit from our parent company’s massive R&D spending of nearly USD 3.6 billion (EUR 3 billion) per year, and in our most recent meetings between NTT DATA’s regional directors, it was clearly spelled out that Erfurt is a strategic location for our long-term involvement.”