KfW: Artificial Intelligence Use Increases in German SMEs

The proportion of German small and medium-sized enterprises (SMEs) employing Artificial Intelligence (AI) has surged in recent years, according to research by KfW. In the period from 2022 to 2024, 20 percent of these companies adopted AI solutions, representing nearly 780,000 businesses. This marks a significant increase from the 4 percent utilization rate observed between 2016 and 2018.

Larger companies, employing over 50 staff, are leading this trend, with 36 percent using AI in the recent period, up from just 6 percent in 2016-2018. Even smaller firms with fewer than five employees saw a 19 percent AI adoption rate during 2022-2024.

The analysis, derived from the KfW SME Panel survey, highlights that AI adoption is highest in knowledge-intensive service sectors, reaching 28 percent. This includes areas like advertising, market research, and business consulting. The manufacturing sector, particularly companies with their own research and development (R&D) efforts, also shows a considerable AI uptake at 23 percent. In contrast, the construction sector lags, with only 8 percent of companies using AI.

Companies engaged in R&D utilize AI nearly three times more frequently (53 percent) than those without R&D activities. Furthermore, having a digital strategy correlates with a higher likelihood of AI adoption. Internationally active companies are almost twice as likely to use AI compared to regionally focused ones, likely due to intensified competitive pressures.