Siemens AG will invest €2 billion ($2.2 billion) to expand high-tech manufacturing, including a new plant in Singapore and an expansion at its Chinese factory in Chengdu.

In Singapore, the German industrial conglomerate is spending €200 million to build a facility that will produce factory automation devices to meet rising demand in Southeast Asia, Siemens said June 15.

While Chancellor Olaf Scholz’s government is pushing to reduce Germany’s dependence on China, Siemens is bolstering its presence in the country. It will spend €140 million and add 400 jobs at its Chengdu site that makes factory automation products.

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Siemens is profiting from a strategic revamp toward efficiency-boosting, software-driven product lines with higher profit margins. The company, also known for making high-speed trains, raised its outlook twice in fiscal 2023 as revenues and orders grew in its main businesses while the company still sat on a record order backlog of €105 billion in May 2023.

The German manufacturer sees rising demand for digital technologies in all industrial businesses and regions, chief executive officer Roland Busch said during a speech in Singapore. Siemens may also raise its mid-term annual revenue growth targets, he told Germany’s Handelsblatt newspaper.

Siemens is eyeing acquisitions to grow but is currently focusing on smaller and medium-sized targets because there aren’t any major gaps in its portfolio, Busch said on a call with reporters. The $1.6 billion acquisition in 2022 of U.S. buildings software firm Brightly was medium-sized, he added.

“Everything that is adding to our industrial core in areas like supply chain, semiconductors or simulation is interesting,” Busch said. “We are ready, we also have the cash for a bigger strike, but it has to be meaningful for our shareholders.”

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Siemens rose as much as 1.5% in Frankfurt. The shares are up around 28% in 2023.

Its digital industries division, which focuses on labor-saving factory automation devices, is expected to deliver a profit margin of as much as 23.5% in the fiscal year through September 2023. Its smart infrastructure unit also raised guidance. The unit helps industrial customers reduce their carbon footprint with a combination of hardware and software offerings.

Siemens expects to raise research and development spending — including on artificial intelligence technologies — by €500 million and plans to announce more investments in Europe and the U.S.