Microsoft is planning a billion-dollar investment in the Rhineland region.
Germany has been seen as a problem case when it comes to digitalization and IT infrastructure for decades. Compared to most European neighbors, internet and mobile coverage in this country is in need of improvement. Dead zones are not uncommon, whether in rural areas or in the urban subway – there is a pressing need for catching up.
Since Corona: Germany catching up in terms of digitalization. At least there was a strong push due to the pandemic. When office employees were sent to home office and schools were only kept open through distance learning, a sense of urgency was felt in many municipalities. Today, Germany is better positioned in many places than it was 5 years ago.
Foreign investors are also bringing fresh wind and new shine. Tesla has been producing its electric vehicles for the European market in Grünheide near the capital for several years now. Further settlements of large IT companies are planned, such as in Magdeburg, where the US chip manufacturer Intel wants to build a new location with thousands of jobs. New research and development centers are also being built in Dresden and Leipzig.
Microsoft Billions flow into western Germany Last week, the next announcement: NRW is also set to benefit. Specifically, Microsoft plans to invest billions in western Germany. The focus will primarily be on the further development of the promising field of artificial intelligence (AI). The close proximity to large industrial customers such as the energy industry in the Ruhr area or the chemical companies in the Rhineland is expressly desired.
NRW can use this future perspective well. Beyond the flourishing Rhine region, the most populous state in Germany has been struggling, and the structural change has left deep marks, especially in the Ruhr area. With the departure from mining and the closure of the mines, there was a significant economic decline in the region. The people of the Ruhr area are proud of their glorious past, but now there is an urgent need for a future perspective.
State-of-the-art data centers – including qualification measures Microsoft and its AI investment could provide new impetus here. Federal Chancellor Olaf Scholz, on behalf of the federal government, was pleased at the official announcement. Specifically, state-of-the-art data centers are to be built at the locations of Bergheim and Bedburg. The tech giant plans to invest a total of 3.5 billion US dollars (around 3.2 billion euros) by the end of 2025. Part of the money will go to the existing location in Frankfurt am Main, but the majority will go to NRW.
From the perspective of local politicians and employee representatives, the prospect that Microsoft will also help implement corresponding qualification, retraining and further training measures in the future is particularly pleasing. This is likely to further drive the structural change.
State government counts on further settlements The state government also hopes for the radiance of the international giant – and is counting on further settlements of other companies in the following years. Instead of pessimistic obituaries for the German business location, not least with reference to the high tax burden, Microsoft’s billions could also give the business location a new glamour on an international level.
In the case of Microsoft, the key factors for the location decision are not least the very reliable and largely fail-safe energy supply as well as the availability of renewable energies. At least in these points, Germany is still considered a pioneer. In addition, Microsoft is currently investing worldwide in other locations, including around 2.5 billion pounds in the UK and another 5 billion Australian dollars in Down Under. Here, too, the AI sector is to be strengthened and expanded.
Microsoft stock with short-term setback – analysts optimistic While the participants in Germany celebrated the decision last week, the Microsoft stock has fallen in recent days. On a weekly basis, the share lost around 3 percentage points. However, this is a rather moderate correction in the long term: Looking at the last 6 months, the Microsoft stock is up more than 25 percent.
According to analysts, things are likely to continue to rise: After the latest figures were presented at the end of January, several experts gave buy recommendations for the Microsoft stock, with price targets ranging from $440 (JP Morgan) to $480 (UBS). Most recently, the share was trading for around $400.