The 2024 3D Printing Macro Outlook: IDTechEx’s Senior Tech Analyst Sona Dadhania on the Complex Financial Environment
It can often seem like there’s very little upside to trying to make sense of the trajectory of the global business environment, especially in the 2020s. One of the biggest challenges involved lies in the simple fact that the macroeconomic conditions currently prevailing across the globe are themselves so difficult in every sense of the word.
They’re difficult to experience, difficult (and frequently, unpleasant) to observe and keep track of, and even if you work at keeping track of those conditions, they are — above all — difficult to come away from with a satisfying interpretation. In turn, this leads most to shy away from even trying to follow the emergence of a “big picture.”
When that happens, the difficulties involved tend to combine, and the overarching challenge becomes something of a self-fulfilling prophecy: since people begin to generally avoid all attempts to form views of the grand scheme of things, the exercise itself starts to seem entirely impossible, and counterproductive, and so forth. The problem with that is that no industry exists in a vacuum, and this is particularly true about any industry comprising the manufacturing sector.
Manufacturing is one of a handful of strategic sectors that is most responsible for shaping, as well as most shaped by, the global macroeconomic trajectory. Despite the inherent difficulties, then, if you can force yourself to diligently follow the daily unfolding of the global economic narrative, it can be an indispensable tool for additive manufacturing (AM) companies in planning their business operations.
With that in mind, I reached out to Sona Dadhania, senior technology analyst at consultancy IDTechEx, and asked her to help me make sense of some of the trickiest areas of the additive manufacturing (AM) industry to get a handle on: the state of mergers & acquisitions (M&As) and the prospect for inflow of investment dollars into the industry. As you can see from her responses, the seemingly chaotic nature of those issues in 2023 becomes much clearer when contextualized within the economy at-large:
Along those lines, it is perhaps unsurprising that the largest AM financing rounds in 2023 went to companies whose operations revolve around advanced manufacturing techniques including AM, but otherwise function like contract manufacturers rather than as original equipment manufacturers (OEMs). AM industry stakeholders are clearly being cautious in general about investments that they still view as too risky.
Nonetheless, the investments those stakeholders are still making seem driven by an overall effort towards supply chain stabilization, a motivation also driven by the economic uncertainty related to persistent inflation, high interest rates, etc.:
Thus, even in cases where investors are taking a risk on new technologies, it is notable that, again, those technologies tend to form the basis for manufacturing service providers rather than a basis for selling 3D printers:
Even though the most-watched hypothetical M&A deals from 2023 didn’t pan out, the expectation remains that M&As will inevitably pick back up. And, in November 2023, two significant purchases did go through: Nexa3D acquired Essentium, and BigRep acquired HAGE3D. (Shortly after the latter was announced, BigRep announced a SPAC deal to go public on the Frankfurt Stock Exchange.)
The nature of the successful mergers may confirm, to some extent, the validity of something you’ll hear frequently from AM industry insiders, which is that the market is simply “too fragmented.” Dadhania shed light on this as well, pointing out that while it’s certainly true about the OEM space, M&As aren’t the only way that problem will be sorted out:
The other factors that should help determine the way the hardware market consolidates lie in the growth trajectories of all the areas of the industry aside from hardware. In other words, the more that materials portfolios and software platforms standardize, the clearer it will become, which machines are most compatible with the feedstock and software markets in their more mature state. Dadhania concluded by emphasizing that effective analysis of the dynamics of the AM industry will, more and more, depend on giving equal focus to each segment of the overall industry:
And, to reiterate a final time, how critical it is to keep track of the big picture, the dynamics of the materials and software markets can be expected to be particularly affected by the macro outlook. Public policy issues related to international markets for critical minerals are already directly impacting the shape of the metal powders space, and AI and cybersecurity will continue to center the focus of firms on the software side of the AM industry.
So, pay attention to all business news, not just AM news; pay attention to what the Fed is doing, pay attention to supply chains. It’s overwhelming, but if you can wrap your head around microstructures and lasers and rocket engines, you can understand the global business environment — even in the 2020s.
Featured image courtesy of IDTechEX
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