In a surprising upset for the world of metal binder jetting, Markforged (NYSE: MKFG) has announced its intention to acquire Digital Metal. The firm has entered into a definitive agreement with Digital Metal’s parent company, Höganäs AB, to purchase the subsidiary for $32 million, thus allowing Markforged to enter into the metal binder jetting space.
Digital Metal’s metal binder jet technology dates back to 2003 and a small startup called “fcubic,” which was acquired by Swedish metal giant Höganäs in 2012. Its first commercialization came in the form of metal 3D printing services, with which it now claims to have produced over half-a-million metal parts. In 2016, Digital Metal ultimately began selling 3D printers in 2016 in the form of the DPM 2500 system. In addition to automated powder handling and semi-automated de-powdering, Digital Metal has one of the widest fully qualified material portfolios of any provider. It has qualified titanium, nickel superalloys, pure copper, common stainless steels, and low alloy 4140 steel.
This is a critical complement to Markforged’s existing product line. Markforged was the first to commercialize continuous carbon fiber 3D printing in 2014 before launching a bound metal extrusion technology in 2017. With the addition of Digital Metal, the company can now offer large batch production of metal parts. This gives Markforged a large footprint in the broader bound metal printing market, which includes both metal binder jetting and bound metal extrusion.
The move is significant for a number of reasons, the most important of which is the leverage it provides Markforged in the binder jetting market. Until now, Digital Metal was one of two companies with metal binder jetting systems in western markets, operating across three continents include North America and Europe. According to the “Bound Metal & Metal Binder Jetting AM 2022“ report from SmarTech Analysis, “Digital Metal accounts for just under 20 percent of global metal binder jetting hardware revenue share as of the end of 2021.”
The other firm is ExOne, the pioneer of metal binder jetting which was acquired by Desktop Metal. Desktop Metal and Markforged have a storied history, involving lawsuits and the launching of similar products. Desktop CEO Ric Fulop once sat on Markforged’s own board before launching his own company that included a bound metal extrusion technology and metal binder jetting products. The latter line of machines took significant time to get to market, with ExOne likely giving it a critical boost in commercializing its metal binder jetting lines. Desktop even announced a continuous carbon fiber 3D printer to compete with Markforged but has yet to bring it to market.
In other words, the two are fierce competitors for what may be more than just business reasons. They are not alone, however. While ExOne and Digital Metal dominate the metal binder jetting sector, powerful players are in the process of introducing their own versions of the technology: HP and GE. While both already have their metal 3D printers in the hands of some users, they have not yet made full commercial entries. They are expected to do so soon, however. I wouldn’t be surprised if, spurred by Markforged’s interesting move, they made their own announcements in the very near future.
Metal binder jetting is expected to play an important role in the industrialization of metal 3D printing due to the fact that large batches of parts can be made using less expensive powders and existing metallurgy workflows. Parts made with the technology must be sintered to their final form using methods familiar to the metal injection molding industry. Automotive companies like Ford and Volkswagen claim that they will use metal binder jetting to produce metal end parts in large numbers in the next couple of years. Due to all of the above, SmarTech expects the bound metal printing segment to produce $54 billion in parts through 2030.
Therefore, Markforged is primed to take advantage of this burgeoning market with a technology that is already proven and can be accompanied by automated processing solutions. Coupled with Markforged’s own sophisticated software, which applies machine learning all across its network of customer machines, the company could become unstoppable in automotive and other sectors.
“With the Digital Metal acquisition, Markforged is advancing our vision for distributed manufacturing by enabling the reliable, high volume production of precise metal parts at the point of need. Infusing Digital Metal’s solution into The Digital Forge platform allows us to address new applications in the medical, automotive, luxury goods and other industries,” said Shai Terem, president and CEO of Markforged. “The Digital Metal team has created a robust and scalable solution that complements our existing technologies. I look forward to welcoming their talented people to Markforged.”
“Markforged’s easy-to-use platform, best-in-class software capabilities and material expertise felt like a natural fit for the future of our technology,” said Christian Lönne, CEO of Digital Metal. “With Markforged’s experience and go-to-market scale, we are confident that we will be able to grow our technology together and help more manufacturers produce the high-volume metal parts they need to drive highly productive and cost efficient operations.”
The transaction will see Markforged pay Höganäs about $32 million in cash, 4.1 million shares of Markforged common stock, and approximately $1.5 million in cash to settle intercompany balances. The purchase is expected to close in the third quarter of 2022.
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