Siemens has warned that it will prioritise artificial intelligence investment in the United States and China over the European Union unless the bloc adapts its regulatory approach, with chief executive Roland Busch criticising existing rules as overly restrictive for industrial use cases.

Speaking at the Hanover trade fair and first reported by Bloomberg, Busch said most of the company’s planned €1 billion investment in industrial AI would be directed towards the US, citing the regulatory burden created by the EU’s AI Act and Data Act. He argued that current frameworks fail to distinguish adequately between industrial applications and consumer-facing technologies, adding layers of oversight to sectors already governed by specific regulations.

“It’s complete nonsense to treat industrial and machine data the same way as personal data,” Busch said. “I can’t explain to my shareholders why I’m investing money in an environment where I’m being held back.”

Criticism of the EU’s approach has been mounting, with some industry figures warning that complex and, at times, contradictory rules risk leaving Europe trailing global competitors in the development and deployment of emerging technologies.

Engineering equipment manufacturers, for example, are already required to comply with the EU Machinery Regulation, which obliges them to assess and mitigate risks associated with autonomous systems, raising concerns about duplication when combined with AI-specific legislation.

In response to pressure from both European and US technology firms, as well as member states, the European Commission published proposals in November aimed at easing the regulatory load. These included delaying requirements for high-risk AI systems by up to 16 months, simplifying the reporting of cybersecurity incidents, and relaxing certain data protection provisions to support AI model training.

However, Busch indicated that the proposed changes would not go far enough to materially reduce the burden on companies operating in the region.

German Chancellor Friedrich Merz echoed these concerns, signalling political support for reform. Speaking in Hannover, he said the German government would push “for extricating industrial AI from the current, overly restrictive straitjacket of the EU’s regulatory framework.”

“We simply cannot proceed as was once envisioned in Brussels many years ago — at a time when the sheer scale and scope of AI applications were not even remotely anticipated,” Merz said.

The comments come as Siemens continues its evolution from a traditional engineering and electrification firm into a software and automation-focused business. The Munich-based company, now the most valuable listed firm in Germany with a market capitalisation of around €194 billion, has increasingly invested in digital technologies, with software accounting for more than a third of revenue in its Digital Industries division.

At the Hanover event, Siemens also introduced its Eigen Engineering Agent, described as one of the first commercially available AI systems capable of independently carrying out tasks in industrial automation. Unlike systems that assist engineers with recommendations, the agent can act within engineering environments, generating code, configuring systems, and verifying its own outputs.

The company said the technology could increase productivity by as much as 50%, reflecting the growing role of AI in complex industrial settings where high levels of precision and reliability are required.

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Siemens’ strategic pivot towards software dates back to its 2007 acquisition of UGS Corp., and has accelerated under Busch’s leadership. In recent years, the company has acquired Altair and Dotmatics for a combined total of roughly $15 billion, as it expands its capabilities across simulation, AI applications, and operational software.

“Of course, we look at the software sector — whether it involves simulations, AI applications, or even what we call operational software,” Busch said. “Everything that has anything to do with data processing is of great interest to us.”

Despite ongoing investment in both hardware and software, Siemens has indicated that it does not plan to separate out its software business as a distinct reporting unit in the current fiscal year, instead aiming to “selectively” increase transparency by disclosing additional software-related metrics.

The company’s stance highlights the growing tension between regulatory ambition and industrial competitiveness in Europe, as policymakers seek to balance oversight with the need to support innovation in rapidly evolving technologies such as AI.