Siemens is one of the world's largest industrial technology companies — a conglomerate that has successfully transformed itself from a diversified electrical engineering company into a focused industrial automation and digitisation business. Its Digital Industries division is the beating heart of the modern factory floor, supplying the programmable logic controllers, industrial software, and motion control systems that run manufacturing globally.
Siemens Digital Industries serves factory automation customers — automotive manufacturers, electronics producers, food and beverage companies, and pharmaceuticals. This division is highly cyclical, closely tracking global manufacturing PMI and capital expenditure in the automotive sector. When car manufacturers announce new model platforms, Siemens receives large orders for factory retooling. When automotive capex is frozen — as in 2019 and 2023 — Digital Industries orders fall sharply.
Siemens Smart Infrastructure serves building and grid customers — supplying electrical distribution, building management systems, and grid automation. This division is more defensive, driven by energy efficiency regulation and grid modernisation programmes that continue regardless of short-term economic conditions. The European grid investment programme and US Inflation Reduction Act have created multi-year order backlogs in this segment.
Siemens and Atlas Copco are often compared as the two premier European industrial automation plays. Both are high-quality businesses with strong service recurring revenue. The key difference is geographic and sector exposure: Siemens has deeper automotive and electronics exposure (more cyclical), while Atlas Copco has more compressor and vacuum exposure tied to semiconductors. Siemens also trades at a discount to Atlas Copco's premium — reflecting Germany's energy crisis headwinds and China dependency.
Siemens has invested heavily in industrial software — acquiring Mentor Graphics (EDA software), Bentley Systems (infrastructure software), and developing its own Xcelerator platform for digital twins. This software business carries higher margins and more recurring revenue than hardware, structurally improving Siemens's earnings quality through the cycle. The software share of revenues has grown from near zero in 2015 to approximately 25% by 2024.
| Siemens | Atlas Copco | ABB | |
|---|---|---|---|
| Core focus | Factory automation + software | Compressors + vacuum | Electrification + robotics |
| Automotive exposure | High | Low | Medium |
| Typical P/E | 15–28x | 18–35x | 16–28x |
| Software share | ~25% | ~10% | ~15% |
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