Ifo-Bertelsmann Report: German industry investment stagnates while high-tech pockets surge
Ifo-Bertelsmann study finds German industry investment stagnant overall, with high-tech sectors and Infineon’s €5bn Dresden plant highlighting regional concentration and policy needs.
Strong investment in Dresden contrasts broader slump
Infineon’s planned €5 billion semiconductor factory in Dresden and a sharp rise in its share price highlight a rare positive note for German industry investment. The Munich-based chipmaker is preparing to open the plant on July 2 and has signalled readiness for a “broad upturn,” underscoring momentum in selected high-technology fields. That development contrasts with a decade-long malaise across many traditional industrial segments.
The Ifo Institute and Bertelsmann-Stiftung study frames this pattern as a mixed picture: concentrated dynamism amid overall stagnation. Analysts stress that while headline investments are clustering in specific sectors and regions, the general investment level remains close to its mid-2010s baseline.
Study finds overall stagnation but sectoral divergence
Researchers who compiled the report say corporate investment in Germany has hovered around €600 billion annually, roughly the same level as in 2015. That plateau reflects cautious corporate decision-making and a loss of momentum after a brief post-pandemic rebound that did not mirror patterns seen in some other advanced economies. The study’s methodology combined conventional statistics with machine-learning analysis of company announcements to draw a more granular view.
The findings show clear divergence across industries: pockets of vigorous investment sit alongside prolonged weakness in long-standing manufacturing sectors. The authors present the results as neither catastrophic nor rosy, calling the evidence a basis for sober policy debates about the country’s industrial trajectory.
High-technology sectors drive fresh investment momentum
Pharmaceuticals, electronics and optics emerged as the most dynamic areas in the study’s forecast, registering the strongest investment uptick in recent years. Those sectors are attracting capital to new plants, research facilities and advanced production lines, reflecting global demand for semiconductors, biotech and precision optics. Observers say these moves demonstrate that Germany can still mobilize resources around future-facing technologies.
Bertelsmann coordinator Marcus Wortmann describes the high-tech surge as “a light for the German location,” suggesting targeted strengths that could anchor a broader industrial recovery. Yet the report cautions that growth in these niches will not automatically offset shortfalls elsewhere without complementary policy support.
Automotive and machinery sectors remain subdued
The automobile and machine-building industries, historically pillars of Germany’s industrial base, account for a disproportionate share of planned investment but are not expanding sufficiently to restore overall growth. The study estimates the auto sector alone represents about one-third of planned investment volume, while machinery shows only incremental innovation rather than disruptive expansion. Business group leaders, including the head of the BDI, warn that structural pressures have already translated into job losses and lower gross value added.
Peter Leibinger of the BDI notes that roughly half a million industrial jobs have disappeared over the past ten years and that gross value added has fallen by about 7.5 percent. These trends, the report argues, reflect high costs, technological realignment and intensified global competition, particularly from emerging manufacturing hubs.
Investments concentrate in four federal states
The report identifies a strong geographic concentration of future investment: Bavaria, Baden-Württemberg, North Rhine-Westphalia and Saxony are set to receive more than half of planned capital expenditure. This regional skew is illustrated by Infineon’s decision to base its new wafer fab in Dresden, which alone symbolizes a broader eastward and high-tech-centric investment pull. Such concentration raises questions about balanced national development and the distribution of industrial renewal.
Analysts warn that while these states may benefit from clustering effects and existing supply chains, other regions risk lagging unless policy measures and incentives are enacted to broaden investment flows.
Researchers call for tax, energy and venture-capital measures
To shift the trajectory, the study’s authors recommend a two-pronged approach: traditional supply-side measures and a stronger appetite for risk capital. Lower taxes and reduced energy costs are presented as immediate levers to relieve pressure on core industries. At the same time, the report urges more venture capital and systemic support for start-ups that focus on high-growth, high-tech markets.
Otto Meyer zu Schwabedissen of the Bertelsmann-Stiftung argues that combining incentives for established firms with intensified backing for innovative newcomers could preserve existing industrial strengths while creating new growth areas. The researchers stress that policy design will determine whether the observed high-tech pockets can translate into wider, sustainable gains.
The Ifo-Bertelsmann analysis offers a data-driven corrective to alarmist narratives about deindustrialization while underscoring persistent vulnerabilities. Policymakers, industry leaders and investors face a narrow window to translate concentrated momentum into broader industrial renewal.
