Additive manufacturing is the transformative manufacturing approach of building a three-dimensional object layer-by-layer that enables the creation of stronger but lighter prototypes and fully functional components.
Advances in machinery, materials and software have made AM mature rapidly in many concrete ways in recent 10 years. AM, as one of the most revolutionary technologies, has moved beyond academia and hobbyists' workshops to global manufacturing industry, with wide applications from healthcare to aerospace.
The upstream includes scanning equipment, software, raw materials and AM equipment parts manufacturing. Midstream is mainly AM equipment manufacturers, and most of them also provide printing services and supply raw material. Downstream applications cover aerospace, automotive, shipbuilding, energy, electronics industry, medical health, etc.
The up and down arrows also show that applications have moved from academia and consumables & electronics to aerospace and automobile, which are two sectors considered as the ones with most future potential.
What does AM mean for manufacturing companies beyond prototyping?
Not some niche uses as anticipates, AM may have its most frequent applications within manufacturing firms with low production volumes, requiring fast reaction time to market demand, since AM enables a high level of customization and complexity design. According to Bain's analysis, as the complexity of parts created increases, the cost advantage of using 3D printing will be plain. In the AM design advantage area, the most common uses are prototyping, production jigs, and even dental aligners. In the AM cost advantage area, hearing aids, orthotics and athletic shoe will also benefit. For those general plastic parts, the traditional manufacturing processes still dominat the market.
Another point is the quality and speed. According to EY's 3D printing report, "as printer speed has increased, quality assurance tools embedded into printers enable better validation, layer by layer, of whether the printed product is within acceptable tolerances." In addition, there is now a wide variety of materials and material providers, giving companies more options for producing parts and products. The benefits that AM offers can be summarized in the following phases:
- In the design and engineering phase, AM will offer fast prototyping and customizable adjustments. In addition, it will provide better functionalities with less weight.
- In the manufacturing phase, as there is no setup time needed and fewer production interfaces, the assembly time will be shortened, with less material waste.
- In the service phase, AM will simplify the supply chain and be more efficient in the sales process by enabling refurbishment for specific components and less dependency on suppliers.
Despite the benefits, barriers are still there for wide adoption. This will be shown with more detail in the next part.
How big is the market?
According to Wohlers Associates' analysis, the total market size worldwide hit USD 9.68 billion in 2018, with a 5-year CAGR of 26.1%. In China, the market has surged since 2013. The domestic market size in 2018 reached USD 2.36 billion, compared with which in 2013, it was only USD 0.32 billion. The 5-year CAGR was 49.1%, nearly doubled the global one.
Predictions on future market size have shown high expectations, however, how fast the adoptions will still depend on the speed with which firms can overcome the barriers.
Current 3D printing material and machines prices are still high for mass production, which is being finished through traditional processes. According to Bain, with advances technology such as growing laser power, multiple laser adoption and better projection technology, along with lower machine prices due to increased sales, the production costs should decrease. But it's not clear when these factors will combine to push down prices, and high costs for plastics and metal materials is another issue. Apart from the volume and cost, scarcity of manufacturing guidelines and talents will also slow down the expansion.
For China's AM firms, one major risk is that the industrial level AM equipment's core components such as high beam quality laser systems are still heavily dependent on imports. Besides, supporting software has also been dominated by overseas companies.
Next-gen of AM
According to the 2019 TMT industry predictions published by Deloitte, more materials can be applied in the 3D printers today, with higher speed and larger size. It is predicted that after the hype period, even after the growth rate has gone down, the AM industry will keep a growth rate of more than 10% in the following years. One main driver is the material upgrade. The global market is transforming from plastic to metal printing since plastic is suitable for prototyping, but AM's ultimate target should be the huge market of metal component manufacturing. It is expected that metal will take more than half of the total AM market in 2021.
Apart from the material upgrades, additive remanufacturing is the use of AM technology to refurbishment of specific components or damaged parts. For example, the key core components of the aero-engine are often seriously damaged during their working phase, the amount of scrapped parts is large, and the damage modes are complex. It is one of the the main factors that restricts the maintenance cycle and increases cost of the engine: ablation, cracks, foreign objects, etc. Therefore, the remanufacturing technology of key core components such as compressor and turbine blades is one of the frontier technologies and application fields. Applying AM technology to the remanufacturing of damaged parts of high-value equipment can save costs, reduce the inventory of high-value spare parts, especially when done quickly and accurately.
Domestic AM players
Xian Bright Laser Technologies (BLT, 铂力特) is an integrated 3D printing solution supplier in China which was founded in July 2011; it completed its IPO in the STAR Market, and its current P/E multiple is 99.15. As the first AM Company listed in STAR Market, BLT's key financial indicators are not that outstanding.
According to BLT's prospectus, from 2016 to 2018, the company realized a net profit of CNY 28.7 million, CNY 35.9 million and CNY 58.0 million respectively, yet the government subsidies included were as high as CNY 7.4 million, CNY 13.6 million and CNY 24.6 million respectively, and the proportion of government subsidies to net profit has been increasing from 26% to 42%.
Its prospectus also showed that aerospace was the largest downstream application: it contributed 62.35%, 54.32% and 62.21% of its total revenue from 2016 to 2018 respectively - lighter and stronger are the two main goals of aerospace components. Since BLT has developed metal printing and since recent growth in the aerospace industry, the market expectation has remained high.
Despite the secondary market, private start-ups in the AM industry are also actively growing. In 2017, the capital market's interest in AM reached its peak, which was partially affected by the hype. In 2018, the market began to calm down and gathered toward advanced technology and top enterprises. Among all the 13 companies which secured funding in 2019, LuxCreo (清锋时代) was valued at CNY 975 million (according to ITjuzi,) after its series B round of financing of USD 30 million.
The manufacturing industries of tomorrow winning with multi-craft
More and more companies are entering the AM market in response to supply chain upgrading and manufacturing constraints, which will further promote the overall industry to accelerate innovation. Even though 3D printers can make final parts, it won't be the only way to make objects replacing the conventional processing method.
As a mature industry, tradition casting, pressing and molding processes play critical roles in the manufacturing industry. The global CNC (Computer Numerical Control) machine tool market also grows by about 7% per year and is expected to reach USD 100 billion by 2025.
In the foreseeable future, it is expected that most parts will continue to be produced by casting, forging, stamping and molding processes. A small number of parts will be made by CNC machine tools, and the proportion of parts made by AM will be not as large as imagined before. However, the value of the global component industry is trillions of dollars, and the metal parts industry alone has a value of one trillion dollars per year, even a single part of it can bring huge opportunities and the added value of the parts created by advanced technology (CNC and AM) will be higher.
As a long-term game changer, AM technology is pushing the manufacturers to think 'What is possible?' instead of 'What is feasible?'.