Global technology companies investing in East Germany
Tesla: electric car factory in Grünheide.
Intel: semiconductor factory in Magdeburg.
TSMC: semiconductor factory in Dresden.
Bosch: semiconductor factory in Dresden.
Infineon: semiconductor factory in Dresden.
CATL: car battery factory in Erfurt.
BASF: factory to produce materials for car batteries in Schwarzhede.
Rock Tech Lithium: factory to convert material into car batteries in Guben.
Microvast: battery storage power plant in Ludwigsfelde.
BMW: car factory in Leipzig
Porsche: car factory in Leipzig.
Volkswagen: car factory in Zwickau.
Source: Financial Times.
In connection with the German reunification, then Chancellor Helmut Kohl spoke about the “Blühende Landschaften”, blooming landscape, in the former GDR. Words that during the 1990s ran counter to reality: the economy crashed, industry fell into disrepair and people emigrated en masse to the West.
Now eastern Germany, in particular the federal state of Saxony, is an investment Mecca for international technology companies.
“Silicon Saxony”
Electric car manufacturer Tesla has built a factory in Grünheide in Brandenburg where roughly 11,000 people work.
This summer, Intel, the world’s leading manufacturer of computer processors, also received the green light for heavy subsidies regarding the establishment of a plant in Magdeburg.
And most recently, the Taiwanese semiconductor giant TSMC is to build a factory in Dresden, formerly the center of the GDR’s pride in computer manufacturer Robotron.
Now the city symbolizes ” Silicon Saxony ” – Europe’s cluster for semiconductors, used in everything from fighter jets to phones.
— TSMC joins the existing cluster of microelectronics, which is Europe’s, and soon the world’s, largest, says Ninni Löwgren Tischer, business area manager at the German-Swedish Chamber of Commerce.
Political stability
In Saxony, there is a rich industry exchange between microelectronics and the automotive industry – BMW, Volkswagen and Porsche have factories there – which accelerates development.
— Companies need political stability, and this can be guaranteed in Germany, which is an advantage from an investment perspective, says Ninni Löwgren Tischer.
— Politics is completely behind research and business ventures. There is a greater awareness in the East than in the West that you have to invest and cooperate in order to attract labor and not risk a brain drain like in the 1990s.
Big subsidies
The region benefits from the EU’s strategy to increase self-sufficiency in critical sectors such as batteries and semiconductors, cloud services and pharmaceuticals.
State aid also plays a significant role. The costs for Intel’s factory amount to 30 billion euros, corresponding to almost 352 billion kroner, of which just over a third is financed by the German state. TSMC’s construction is said to cost 10 billion euros – about half is investment by the company itself, while the other half is subsidized.
The availability of renewable energy is cited as another reason why companies are moving east.
— They have invested enormously in, among other things, wind power in Mecklenburg-Vorpommern, which is reasonably close to the other federal states. It is an advantage that much is so compact in the east, says Ninni Löwgren Tischer.
Other explanations are good infrastructure, qualified labor and wage levels. In the East, the gross salary for full-time employees last year was on average about 13,000 euros lower than in the West, according to the country’s statistical authority.
The self-image in eastern Germany, which took a serious hit after reunification, can be strengthened by the development, Ninni Löwgren Tischer assesses.
— There are similarities with Sweden and the investments in green conversion in Norrland. It is good that investments do not automatically only take place in the same locations, but that it also rolls on in other regions that might not previously have been thought to be suitable for it.