German startups rank among world leaders in physical AI, but readiness lags, studies find

Germany near the top on physical AI

A study published on Monday, 2 November, by the market research firm Strand for Amazon Web Services (AWS) ranks Germany among the world's leading developers of AI-driven robots. Its report, titled "AI Gets Physical: The Global Startups Readiness Index", found that nearly a quarter of German startups work on physical AI, against roughly 20% in the United States, Japan and South Korea. Germany also ranks first on workforce and skills, according to the roughly 4,400 respondents across 20 countries. German founders most often rate their own country as one of the best places in the world for this technology. The country scores above average on all five criteria the study treats as decisive, including supply chains, capital, regulation and market maturity.

Customers hold back

The survey also found a brake on growth. Some 70% of respondents said potential customers were hesitating to place orders, slowing their startups down. Only 26% considered their own economy ready for physical AI, though the report expects that to change over the medium term. More than three quarters predict the technology will become standard in their industry within five years.

Ifo flags gaps in IT, administration and schools

On Monday, before the government's digital summit began, the Munich-based Ifo Institute said Germany lacks key preconditions to tap AI's growth potential. Its analysis puts the ICT sector at 4.6% of gross value added, placing Germany in the lower midfield of the EU. In 2025 Germany imported ICT services worth 11 billion US dollars more than it exported, and Ifo researcher Christian Pfaffl said no other EU country depends more on foreign suppliers in this field. Public administration is also lagging, with pre-filled forms still at an experimental stage in Germany while the Netherlands, Denmark, Poland and Austria have largely rolled them out.

In education, Germany sits below the EU average for skills above basic level, and 40% of eighth graders fail to reach level 2 of computer and information literacy. Oliver Falck, who heads the Ifo Centre for Innovation Economics and Digital Transformation, pointed to a knowledge gap in companies.

“AI applications are spreading rapidly, but too many people lack the knowledge to use them productively.”

Ifo also named a lack of specialist skills as the most common reason companies leave planned AI projects unimplemented.

Digital summit opens in Berlin

Digital Minister Karsten Wildberger (CDU) opened the Digital Summit in Berlin on Monday and urged more speed on AI. Speaking to European partners, EU Commission representatives, companies and researchers, he said Germany was still too slow and that AI had developed faster than expected. He called for clear deadlines and responsibilities, especially for energy infrastructure and investment.

“We have to act as long as we still have the possibility to choose.”

On security, Wildberger named cyberspace as the greatest danger, since attackers can also use AI there. For systems that take action on their own, he demanded clear limits, human control and independent testing. He said Germany has set up an AI safety institute that is to work with Canada. On infrastructure, he cited Siemens in Erlangen, where AI and digital twins are used in production, and Deutsche Telekom's AI factory in Munich. Germany wants to double its computing capacity and quadruple its AI computing capacity by 2030, and the state should act as an anchor customer for AI models. On independence from the United States, he said sovereignty was the concept of the moment and meant, first of all, having a choice of partners.

Chancellor Friedrich Merz (CDU) is due to speak at the summit on Monday afternoon, join talks with business representatives and hold a press conference with Wildberger. Officials, experts and tech executives from many countries meet over Monday and Tuesday, 2 and 3 November, to weigh the opportunities, risks and effects of AI.