German Chancellor Olaf Scholz visits the Microsoft Berlin office, in Berlin, Germany, February 15, 2024. REUTERS/Liesa Johannssen
BERLIN (Reuters) -U.S. software giant Microsoft will invest 3.2 billion euros ($3.44 billion) in Germany in the next two years, mostly in artificial intelligence, offering a boost to Europe's largest economy as it faces its worst slump in 20 years.
With its biggest investment in Germany in the last 40 years Microsoft aims to double the capacity of its AI and data centre infrastructure in the country and expand its training programmes, said President Brad Smith on Thursday.
"We are doing this because of the enormous confidence we have in Germany," he said, adding the export-oriented economy had constantly been at the forefront of technological change.
Smith said Germany came second in Europe for the creation of AI based applications and that AI was increasingly being adopted by German companies but ranks 11th in Europe for AI skills.
Chancellor Olaf Scholz said the move represented a vote of confidence in Germany which has also recently seen substantial investments in the battery, chip and pharmaceuticals sectors.
Scholz, who is trying to strengthen Germany's business appeal, acknowledged the export-oriented country was feeling the effects of slower economic growth globally.
"We are waiting for the moment when it grows faster again and then everything will be in place so companies that have invested here and those that invest from Germany are ready," he said.
The DIHK chambers of industry and commerce warned earlier that the German economy would shrink by 0.5% this year, a second year of recession and the worst downturn in two decades.
Companies have called for Social Democrat Scholz's unruly three-way coalition with the Greens and pro-business Free Democrats (FDP) to reform tax and cut bureaucracy.
When asked about red tape and privacy issues, Smith said he hoped to see balanced, practical and thoughtful regulations.
"The questions that people ask in Germany are really on the minds of people everywhere...if we can meet the standards here in Germany, we will meet the needs of the world," he said.
Taiwanese chipmaker TSMC and Intel have committed to Germany in the last year, albeit with considerable state support.
Marianne Janik, CEO of Microsoft Germany, declined to detail where investments would be made, but said the company was mostly looking in the western Rhineland region and around the banking hub of Frankfurt.
($1 = 0.9315 euros)
(Reporting by Madeline Chambers; editing by Bartosz Dabrowski and Matthias Williams, Kirsten Donovan)
