Siemens is looking to expand the use of artificial intelligence in manufacturing to strengthen industrial competitiveness and help protect jobs in high-wage economies such as Germany. Cedrik Neike, a member of the company’s executive board, said AI-driven automation could significantly improve factory productivity and help manufacturers remain competitive despite high operating costs.
Speaking at Siemens’ electronics facility in Erlangen, Germany, Neike highlighted the growing pressure on manufacturers to achieve annual productivity improvements of 7% to 9%. He argued that greater automation, supported by AI technologies, could help factories meet these targets while maintaining production in countries with higher labor costs.
Siemens Plans Major Expansion of Factory Automation
Siemens aims to increase the proportion of automated manufacturing processes from the current range of 30% to 40% to between 70% and 80%. The initiative reflects the company’s broader strategy to integrate AI into industrial operations, enabling factories to improve efficiency and optimize production processes.
Higher automation levels could help manufacturers address productivity challenges without relying solely on lower labor costs or relocating production to other countries. For Germany and other high-wage economies, this could provide a way to retain industrial capabilities while adapting to changing global competition.
Siemens and Nvidia Advance Physical AI
Siemens is collaborating with Nvidia to develop applications for physical AI in manufacturing. The partnership combines AI models with digital twins, virtual representations of physical systems that allow companies to simulate factory environments and test operational changes before implementing them in real facilities.
These technologies can help manufacturers evaluate production configurations, identify potential inefficiencies and optimize factory operations in a simulated environment. Testing changes digitally before deployment could also help reduce implementation risks and improve the performance of industrial systems.
The collaboration reflects a broader effort to bring AI beyond software applications and into physical industrial environments, where it can influence how products are manufactured and how production facilities operate.
€500 Million Investment in the Erlangen Facility
Siemens plans to turn its Erlangen electronics plant into a demonstration site for AI-powered manufacturing. The company intends to invest €500 million in expanding the facility by 2030, supporting its ambitions to showcase how advanced automation and AI can be integrated into industrial production.
The project will provide a practical example of how manufacturers can combine digital technologies with factory operations. As Siemens works toward its automation targets, the Erlangen site could help demonstrate how AI-enabled production systems can support higher productivity and strengthen the competitiveness of manufacturing in Germany.
