Munich: The tech metropolis

Tim Cook is a big fan of Munich. This is something that Apple’s CEO has long made clear; and now, in March 2021, the Cupertino-based corporation decided to expand its European centre for chip design in the Bavarian capital, which will see it invest a billion euros by 2024.

Apple’s investment is an impressive endorsement of “Silicon Valley on the Isar”, or “Isar Valley” for short. The city with its baroque flair is not only home to industrial companies like BMW or Siemens. “Munich is also one of Europe’s top locations for the high-tech industry”, says Professor Dirk Dohse, director of the Research Center Innovation and International Competition at the Kiel Institute for the World Economy. Munich scores well for its excellently trained young professionals, its good infrastructure and its interesting mix of businesses that provides companies with cooperation partners beyond the confines of their own sectors.

At the “Karl” office complex, which is situated close to the city’s main station and was designed by star architect David Chipperfield, Apple plans to focus on further developing its mobile phone technology, especially the new 5G standard and beyond. It is also keen to integrate hardware and software as seamlessly as possible, which includes developing mobile modems. The tech giant from California, which already opened its first small office in Munich 40 years ago, announced that it will be recruiting “hundreds of new employees” to this end. Today the company has seven branches with more than 1,500 jobs; over 350 engineers work at the Bavarian Design Center alone, which was established in 2015. “I couldn’t be more excited for everything our Munich engineering teams will discover”, says Cook.

Also attractive for Amazon, Google and IBM

Apple is not the only top high-tech company to have settled in the city on the river Isar. Google, which has been in Munich since 2006, is in the process of converting a listed former post office building and plans to more than double its team of 1,200 employees. Microsoft moved into a new German headquarters in the Schwabing district in 2016, while only a year later IBM opened a research centre named after the supercomputer Watson just around the corner. Amazon also plans in the near future to bring the 2,500 or so employees it has scattered across the city together at a single facility in Schwabing. “Knowledge- and research-based companies tend to settle in close physical proximity to one another. This allows them to profit from the experience, creativity and intellectual capital that flows from one to the other”, says Professor Dohse. This is the secret of the cluster: innovation nourishes innovation.

Apple itself emphasises the quality of the employment market. “We find talents here that we wouldn’t find anywhere else”, CEO Cook told Frankfurter Allgemeine Zeitung (F.A.Z.) in one of his rare interviews. With its universities, numerous start-up incubators and research institutions like the Fraunhofer Institute for Cognitive Systems and the fortiss software research institute, Munich has evolved in recent years to become a stomping ground for techies. Furthermore, Apple stresses the close cooperation with companies such as the chip manufacturer Infineon, the battery producer Varta and the adhesives specialist Delo, all of which are based in or close to Munich. Professor Dohse also points to the research being done by auto manufacturers in the fields of artificial intelligence and driverless vehicles, and to the region’s importance as a leading biotech cluster. “Cross-sectional technologies are being created that can give rise to lots of synergies.”

Apple’s decision in favour of Munich is also a decision in favour of Germany. Competition for locations is global, and decision-makers in companies have to do some tough calculations. “In recent years, Germany has performed well in international innovation rankings", says Dohse. One role may also have been played by Germany’s active community of developers, which has already invented over 60,000 apps for the Apple App Store. Apple supports a quarter of a million jobs in this way, the company reports.

Interesting for young firms

Apple’s investment will further enhance Munich’s reputation as a tech hub – not least among ambitious young firms seeking the proximity of the big players. It is like at a party: you want to be where things are happening. The World Economic Forum recently announced that it also intends to open a research centre for the fourth industrial revolution in Munich. The city’s downsides include spiralling rents and property prices. Munich is already hardly affordable for many people on a normal salary; nonetheless, the city remains less expensive than other top international locations such as New York, London or Singapore.

Can “Isar Valley” already compete with the greater San Francisco area? The economist Dohse still sees Silicon Valley as being on a rather “different scale”. After all, the global tech giants have their headquarters there, and the ecosystem is bigger and has a stronger capital base. On the other hand, Munich offers plenty of attractions – everything from the Alps to the Oktoberfest. “This is certainly an advantage when it comes to recruiting personnel”, says Dohse. Or, as Tim Cook puts it: “Not everyone who has been well trained as an engineer wants to live in Silicon Valley.”

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