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
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.
Xerox
Fuji Xerox Joint Venture Partnership
Conclusion
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.