The investment will go towards doubling the capacity of Microsoft's "AI and data centre infrastructure", vice chair Brad Smith said in Berlin at an event with Chancellor Olaf Scholz.

Microsoft says to invest 3.2 bn euros in AI in Germany, source: freepik.com

Germany is "constantly at the forefront" of technological change, Smith said, with the country second in Europe in terms of the number of AI-based applications being created.

But Germany suffers from a relative shortage of AI skills, according to Smith, a problem seen across different sectors.

Microsoft wants to "help build out infrastructure to help the Germany economy continue its use of AI and build out the skill base to fill the jobs required", Smith said.

Microsoft is among the large tech companies to have moved fastest and furthest into the sector, investing in ChatGPT-maker OpenAI and pushing AI across products.

The bet on AI has driven a surge in revenues at the US group and pushed it past Apple as the world's biggest company by market capitalisation.

Other tech groups have also moved to expand their AI work in Europe, with Google also announcing Thursday that it would open a research hub in Paris.

Homegrown AI firms to rival the US tech companies have however been slow to get off the ground in Germany.

The head of Aleph Alpha, Germany's hope to challenge OpenAI, said at the end of last year the startup would struggle to compete with the financial backing received by US rivals.