In January 2018, Fujifilm announced the acquisition of Xerox’s fabled printing business. This transaction will bring together three uniquely distinct 3D printing business lines and R&D programs including Fujifilm’s, Xerox’s, and that of the Fuji Xerox joint venture. To understand the implications of the transaction as a whole in relation to the realm of 3D printing, the nature and aspects of each individual company’s 3D printing experience must first be analyzed. More and more businesses, designers and manufacturers are utilizing 3D printers to either create new or improved products or self manufacture a previously supplied component by a third party, functions that are typically R&D tax credit eligible activities.
The Research & Development Tax Credit
Enacted in 1981, the federal Research and Development (R&D) Tax Credit allows a credit of up to 13 percent of eligible spending for new and improved products and processes. Qualified research must meet the following four criteria:
- New or improved products, processes, or software
- Technological in nature
- Elimination of uncertainty
- Process of experimentation
Eligible costs include employee wages, cost of supplies, cost of testing, contract research expenses, and costs associated with developing a patent. On December 18, 2015, President Obama signed the bill making the R&D Tax Credit permanent. Beginning in 2016, the R&D credit can be used to offset Alternative Minimum tax and startup businesses can utilize the credit against $250,000 per year in payroll taxes.
Fujifilm has been offering technical support for over 30 years in a wide variety of areas such as automated retail, inventory management, and refurbishment services for photo-imaging and printing systems. Now, through its North American branch, the Japanese multinational has added a new arena to its repertoire: 3D printing services.
In an age featuring the rapid growth of technology, it was only a matter of time before Fujifilm brought its expertise in 2D platforms into the third dimension, providing a number of services that any consumer or business may need when handling 3D printing technology, including:
- Initial setup and testing
- Operator training and education
- Telephone technical support
- On-site repair service
- Product exchange/swap service
- Depot repair service
- Routine calibration and quality checks
- Regularly scheduled preventive maintenance
- Replacement parts
However, despite Fujifilm’s specialization in a wide array of areas related to 3D printing, manufacturing 3D printers is currently not one of them. The Xerox and Fuji Xerox acquisitions are going to bring Fujifilm deeper into the world of 3D printers.
Aside from being one of the world’s leading patent holders, Xerox has been at the recent forefront of research related to the potential of printed electronics. Over the last few years, Xerox has made several investments with the purpose of exploring all of the possibilities that 3D printing opens up in regards to new manufacturing concepts. Some of the experiments have involved the utilization of flexible, conformal image sensors and detector arrays for medical imaging and security applications, or smart inks taking 2D and 3D printing beyond shapes and colors and adding electronic functions to automotive or wearable devices, or even electronics that can configure themselves from microchip inks. The integration of Xerox’s developing printed electronics and sensors into 3D printers converts a static 3D printer into a smart 3D printed final product.
Fuji Xerox Joint Venture Partnership
Fuji Xerox was established in 1962 as the joint venture partnership between Fujifilm and Xerox, and they have also been at the forefront of the evolution of the 3D printing industry in recent years. One of the limitations of conventional 3D printing data formats is the inability to describe an object’s internal structure or retain information on the colors and materials used to print objects, as well as the troublesome intermediate processing for data conversion and the work required to recover data that was corrupted during processing. To overcome these limitations, Fuji Xerox, together with the Keio Research Institute in Japan, has created and researched the FAV (Fabricatable Voxel) format, a new voxel-based data format, which enables users to freely model and control complicated internal structures, thus broadening the range of possible expressions of 3D printers. Voxels are essentially the 3D equivalent of pixels, and for each voxel, users can define various attribute values, such as color and material information.
With Xerox’s 3D printed electronics and sensors, Fuji may have the opportunity to enable all 3D printers to leapfrog and produce 3D printed smart products. Once the transaction and appropriate restructuring have been finalized, we will have a much better idea of Fuji’s overall strategy with regard to the synergy of its multiple 3D printing business lines.
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Charles Goulding and Tyler Gianchetta of R&D Tax Savers discuss the Xerox acquisition.