Adolf Hitler didn't pay much attention to the Kriegsmarine, because he had as his best advisor Fieldmarschall Hermann Goering (they were very close friends back from 1928), who has openly against giving any budget increase to the Kriegsmarine or the Wehrmacht. Just an example to illustrate Goering's way of thinking:
When the british troops were cornered at Dunkirk and the Panzers and Infantry Division were at less than 5 hours, Goering told Hitler to stop them, because his Luftwaffe was more than enough to take care of the british troops. Of course, his Luftwaffe did little or nothing at all and you know the results. This gave the british High Command and Sir Winston Churchill more than enough time to plan and execute the evacuation. Almost the same happened when Goering reviewed the research budget for the u-boats and many other branches of service in the Kriegsmarine and Luftwaffe as well. And he stood against it from the beginning. Goering was very selfish and could never have the vision of seeing the 3 forces (Navy, Army and Airforce) working together to achieve a common benefit.
There is the answer to why did the germans neglect the production of more sophisticated u-boats, until it was too late to make a difference.
CapZap