With Almost $0.7 Billion in Funding, is Carbon Now a 3D Printing Heavyweight?

In 3D printing, its common to get big news weekly.  At least, that’s been the trend the past eight years (as long as I have been in this industry). Probably the biggest recent news in 3D printing was the latest funding round closed by Carbon, in which $260M was pledged by various big-name groups, bringing the company’s total fundraising since its inception to a reported $680M+.

This poses several questions which perhaps could be best summarized by a broader one –is Carbon really a startup anymore?  Should it now be considered one of 3D printing’s heavyweights, alongside much larger, more historied competitors such as 3D Systems, HP, Stratasys, and the like?

Why the Money?

 In order to put some context behind Carbon’s excellent fundraising performance, it’s important to understand the reasons that this business might attract big money.

    • As a company, Carbon has crafted a catchy, compelling brand and message all the way from its beginning. It’s very easy to see how big investors might be wowed. Carbon seems to inherently know the things to say, and what to highlight, in order to secure the dollars.

 

    • Beyond talk and branding, SmarTech believes that Carbon is sitting on something special. Carbon’s value proposition is often conveyed in a way that is meant to be cool, catchy, an in tropes that are becoming a bit tiresome in the industry (10x faster speeds!). But the reality is that Carbon’s technology platform and its business model really are setting Carbon apart from the rest of the industry.

 

In particular, we think that investors aren’t getting a full picture of Carbon if they don’t understand the role that Digital Light Synthesis (Carbon’s slickly named printing process) might play in the broader world of polymeric 3D printing, and even broader plastics manufacturing.

    • Such “high speed” or “layerless” photopolymerization technologies are perhaps the most interesting thing to happen to plastic 3D printing since, well, the invention of the traditional photopolymerization printing technologies, which were the first true 3D printing technologies.

 

    • Carbon isn’t the only firm to offer this type of technology for a 3D printing platform – at some level, 3D Systems and EnvisionTEC also offer a similar process being leveraged in different ways and with relatively minor mechanical differences. Newcomers like Nexa3D and Origin also have relatively similar printing capabilities but aren’t as far along in establishing a serious 3D printing business as the other firms mentioned above.

 

    • At their core, these processes utilize a projector and some form of curing inhibitor mechanics to eliminate the layer-by-layer printing dynamic. What sets Carbon apart today, however, is its control of the printing mechanics combined with a mastery of the chemistry required to create optimized printing materials for big-time applications.

 

    • Layerless photopolymerization does appear to be positioned to be potentially competitive with injection molding to a serious degree, especially if it is supported by material development, competent software to manage the complexities of a digital production process, and sufficient customer support. Through this lens, Carbon is probably the most advanced of its peers, but it still has some ways to go.

 

So, it makes sense for investors to put money into this technology. There are a huge number of players in plastic 3D printing attempt to advance the technology into the territory of injection molding, but Carbon is one of the furthest ahead in terms of taking business from molding technologies.

Carbon: A 3D Printing Heavyweight?

carbon 3d printing

Carbon isn’t yet a 3D printing heavyweight, and this should not come as a shock to anyone, especially its investors:

    • Compared to 3D Systems, Carbon doesn’t have near the product portfolio (to say nothing of its global network of resellers and parts printing service partners), or the expertise in high impact markets like healthcare. However, here I would champion Carbon’s abilities in the consumer goods market, an area in which it has leapfrogged much of its competition. In 2018 3D Systems held a 16% share of the market.

 

    • Compared to HP, which is closer to Carbon in terms of breadth of technology portfolio, it goes without saying that Carbon doesn’t have the global manufacturing resources or sales channels of a $50 billion company. Little to compare there. However, Carbon’s recently raised funds are expected to go largely towards an international expansion. HP is pushing its technology into familiar markets for powder based plastic printing, while Carbon is mainly charting new territory for photopolymer-based printing (if you exclude the more recently launched dental business). In 2018 HP owned 4% of the market.

 

    • There aren’t many good comparisons between Carbon and Stratasys. Carbon appears to be growing very rapidly after reporting significant increases in printer utilization metrics from its customers over the last year and has told SmarTech to be adding new dental lab customers almost weekly. Stratasys hasn’t been profitable in nearly six years, has been searching for a CEO for over a year, its revenues have been stagnant for four years, and six years ago probably made one of the most grossly over-valued acquisitions in recent tech industry. Still, the company owned a 14% share of the market.

 

Comparing the company’s revenues in its targeted segment vs the major players shows Carbon to be a very minor player.  In 2018 it garnered .6% of a $1.744 billion (USD) market.  However, roughly 2/3 of the market exists outside of 3D Systems, Stratasys and HP and each company has their own vulnerabilities.

Heavyweight or not, Carbon has successfully convinced investors that it compares favorably to the AM industry giants in various ways, at least sufficiently for those investors to open wide their checkbooks.

by Scott Dunham
Vice President of Research
SmarTech Analysis
scott@smartechpublishing.com

Five Thoughts on the State of Metal Additive Manufacturing by Scott Dunham

Metal AM

  • What sectors are showing best opportunities this next year in metal AM?

Demand for metal AM is in a bit of an unsteady period while the global economy and the AM market shake out a bit over the next several quarters. What needs to be understood is that for the longest time, there’s only really been one widely commercially accepted metal additive process (metal powder bed fusion and its variants), and everything beyond that was niche with appeal only to very specific use cases and customers. Now, there three viable technical segments of the market, and this has got companies looking at things differently, which at some level is changing the demand pattern for the industry.

It’s still acceptable to say that metal powder bed fusion is the driving force of the industry today in 2019, so with that in mind, the biggest opportunities are still going to mostly be influenced by this technology group. Aerospace and healthcare are the big traditional areas here. We’re hearing mixed results for the demand pipelines for these technologies in the near term, with some companies reporting their pipelines are either looking more positive than a quarter or two ago, or are at all-time highs, while others are indicating that their pipelines are a bit weaker this year compared to the same time last year. I think the conclusion we can draw from this is that the competitive structure of the industry in powder bed fusion is starting to come into play a bit more and that demand hasn’t increased at the same rate that the number of suppliers with well-positioned technologies has –yet.

If the pipelines are a bit up-and-down, that probably means that the traditional adopters are still a little hesitant on where to go next with additive and how quickly. I would still say aerospace and healthcare will be big market drivers in 2019, but I expect that there may be a bit of a focal shift to oil and gas and industrial components than in the past to supplement sales. While the landscape of oil and gas isn’t exactly bright right now companies are at least now able to see the benefits of metal additive which should drive demand in this sector.

Industrial components, equipment, and products are a broad area and as the awareness and mastery of metal additive technologies filtered down through institutions and corporate R&D labs we’ll start to see more demand from general industry.  I don’t think that 2019 will necessarily be the year that the auto industry really takes off for metal additive because of the more challenging market situation in that industry right now, and the still relative immaturity of new metal binder jetting systems which hold the best long term promise for big integration into auto manufacturing.

  • What headwinds do AM suppliers need to address?

AM suppliers need to start looking at the big picture. I think most companies over the last decade have accepted that their specific metal additive process isn’t the solution for everything. But, what needs to happen now is taking that realization and acceptance to another level, and understanding that metal additive technologies are maturing to a stage where, when taken in aggregate across all the process types that are gaining real steam, metal additive could play perhaps a much bigger role than they might have realized before if customers begin applying each process style where it fits best.

Bound metal deposition solutions from the likes of Markforged and Desktop Metal are making great strides in cost effective prototyping and speeding time to market, all in a package that is fairly accessible.

Metal binder jetting is trending towards being highly productive and scalable for applications that have huge volumes, slightly lower mechanical requirements, and parts made from steels.

Directed energy is continuing to redefine how companies can keep products and systems fielded for longer by being utilized for repair and part augmentation.

And finally, as mastery of metal powder bed fusion continues to increase in the user community, it’s becoming a great candidate for producing low to medium volumes of robust, complex, next generation parts and systems of parts for everything from production to aftermarket and spares especially in high performance materials.

We strongly believe that there is going to be a role for each of these processes to play and customers are going to better understand that. When you piece all the roles together, it’s a huge potential impact. Suppliers should be looking into capitalizing on that big vision and having a tailored solution set for the whole manufacturing chain, not just trying to sell one process to all areas.

  • Which companies do you see as leading, which ones are lagging?

MarkForged and Desktop Metal seem to be flourishing because they’ve brought viable products to market that are bringing some accessibility to metal AM.  They have helped unlock new customer segments who may have found powder bed fusion technology out of reach or not a good fit for their needs/working environment.

GE Additive has only just begun to tap the potential of their group but longer term they are taking a very good approach. Part of that success is related to their decades long experience as a user of their core technologies, and part of it should come from the strategy of building a multi-solution technology portfolio. In the next one to two years they’ll be strong in laser powder bed fusion, electron beam powder bed fusion, and metal binder jetting (if not more solutions).

Companies like EOS who are specialists in one process are going to have to keep pushing the boundaries if they want to survive long term, and here I would say that EOS specifically is at least moving in the right direction. They have an impeccable history of technical innovation and their latest works in Laser Pro Fusion (using many diode lasers) demonstrates that.

Companies that are lagging are those which aren’t positioning themselves for a future where different metal additive processes are going to have clearly understood value propositions within a broader scope of AM implementation. For example, a year ago most in the industry didn’t see much inter-tech competition between bound metal processes and powder bed fusion because of the very different part properties, materials, and economic considerations for each.  However, if you are a company that has historically had success selling powder bed fusion equipment for prototyping applications,  your value proposition is now significantly impacted because there are now other inexpensive and accessible bound metal deposition technologies.  Said technologies can capitalize on unmet demand for cost effective prototyping in metals that powder bed fusion technology was seemed as overpriced.

  • When will a fully integrated solution set be a requirement for any company serious about being a player in metal AM?

Not this year, and not next year, but by 2021 there’s going to be a lot more options and acceptance of metal binder jetting for production and directed energy deposition for repair of high value parts in a serial fashion. Maybe suppliers aren’t too worried about other technologies and processes infringing on their territory, but the opportunity cost of missing out on the new growth these will be a huge mistake. This also goes for having solutions that aren’t focusing only on the ‘factory of the future’ where the potential users are going to have to commit to tens of millions in investment in these factories just to get to a point where the technology is cost effective. What I like most about the compact industrial printer segment being led by bound metal deposition is that it’s opening metal AM to more users –these users are undoubtedly going to want to scale up their use once they’ve had a little time to gain some process expertise and experiment with implementation. They’re going to want to scale up not just in terms of volumes, but to solutions that provide different benefits that span the spectrum of manufacturing innovation that AM can provide.

  • How does AM play into considerations for potential looming economic downturns?  How do vendors message this?

From a historical perspective, we’ve seen how economic downturn can hit the AM industry. 2009 is generally accepted as the only year in the last decade that the industry actually declined. Optimistically, however, there was a pretty quick recovery over the next three years which I think speaks to the real value of the technology. Also, I think we’re in a very different point of the industry today than we were then, when things were still almost entirely driven by rapid prototyping and research. The more global manufacturing companies embrace Industry 4.0 innovation strategies –of which additive manufacturing are at the core –the more insulated AM becomes from economic turmoil, because even as overall manufacturing activity might shrink, additive programs will continue to increase. We see this today in the energy and oil and gas industries which have been challenged for a couple of years, but by all accounts, additive programs remain growing in these areas.

More importantly though, is for companies to understand that the benefits of implementing AM can help them weather economic uncertainty as well. The ability to introduce flexibility into a supply chain can make companies more nimble and able to redirect resources more effectively.

A great example of AM’s ability to withstand economic turmoil long term is what GE power has done with some of its gas turbines. Using additive, they are now offering ‘upgrade packages’ to existing customers that integrate some newly designed components made via additive manufacturing which increase performance and longevity of the system. This is a perfectly sellable solution during economic downturn because customers using these turbines will get greater efficiency and reduce their costs. The role that additive plays in this scenario is that it provides a performance enhancement to the system that isn’t achievable with traditional manufacturing, and it also is positioned as an upgrade to existing equipment so AM can be flexibly applied as the production process as upgrades are ordered.