V-shaped recovery expected for shipments of Personal 3D printer shipments; longer recovery anticipated for Industrial and Design printers; shipments of Professional 3D printers continue to climb.
As anticipated, regional quarantines have taken their toll on much of the 3D printer industry, according to latest market insights by technology market research firm CONTEXT.
Shipments of printer hardware in the high-revenue Design* and Industrial* price classes were significantly down from last year during the first quarter, mostly because of reduced demand from key vertical end-markets where operations have been paused. Conversely, shipments of Professional* printers fared much better, thanks both to strong end-market demand and little disruption from its own supply base. The top vendors of Professional printers are less reliant on OEM production in China or from components sourced from the region so were not hampered by supply-chain interruptions. This, along with continuing high demand, led to shipments in this price class increasing by +12% compared to a year ago.
While the non-kit Personal* market has struggled of late, demand for these products also increased in the quarter as hobbyists look for a way to fill their time while sequestered at home or produce PPE to support their community’s battle against the virus. However, much of this demand remained unmet in Q1 2020 because many entry-level printers include components from, or are entirely produced in, China.
With Chinese factories largely closed, production was simply not possible and unit shipments were down by -38% on Q1 2019 according to CONTEXT. The rising kits market was even harder hit by these supply-chain issues, and some saw shipments fall by as much as -75% on the previous year. Although industry in China has bounced back, and preliminary reports project a production surge, this only impacts the lowest-end products and many vendors of higher-end Design and Industrial printers are actually expecting the second quarter of the year to have been more difficult than the first because their end-markets have been severely impacted by fallout from the pandemic.
Industrial price class
Accounting for 68% of global 3D printer hardware revenues in 2019, the Industrial price class faced challenges in sectors such as automotive and general manufacturing in H2 2019 – so it was already fighting headwinds at the start of 2020. While rolling business shutdowns began in the East and did not affect the West until the end of Q1 2020, shipments of higher-priced products are often concentrated toward the end of the quarter and lockdowns therefore affected global figures for the period as a whole. Customers in many key end-markets – including automotive, aerospace, dental, healthcare, consumer products, movie props and education – were effectively closed down and/or immediately and severely cut back their near-term capital expenditure. While initial expectations were that Chinese companies selling domestically would be the most severely affected in the first quarter, the impact was felt by almost every major printer company. Companies including industry leaders 3D Systems, Stratasys, EOS, UnionTech, HP and GE saw double-digit declines on the previous year’s global shipments. There were also logistical issues: service and sales personnel could not travel either internationally or domestically to help with final installations. New printer shipments in this class dropped -30% from Q1 2019. However, business complications associated with the global reaction to the pandemic were not uniform and there were a few bright spots. Some vendors selling $1M+ printers – which typically have long lead times – reported shipment increases based on opportunities booked last year.
Design price class
Key end-markets for this type of printer, such as jewellery and dental businesses, were all but shut down across the globe, severely impacting demand for new machines. This class of printer is used for prototyping in many industries but, in the face of uncertainty around work stoppages, many companies quickly halted research and development activities and the purchase of expensive equipment to use for such tasks was put on hold. This resulted in -37% fewer Design printers shipping in Q1 2020 than in the same period of the previous year.
Professional price class
As employment shifted to homeworking, the demand for reasonably priced professional printers surged in much the same way as that for webcams, notebook PCs and other "work-from-home" hardware. Unlike Industrial and Design models, most Professional 3D printers are typically desktop or benchtop sized and do not require specific ventilation or industrial-standard work areas, making them ideal for use in the home office. This sector was already doing well: over the past few years, the top companies in the class, including Ultimaker and Formlabs, have not only seen demand rise but have also invested in improving hardware and this has allowed them to compete on a revenue basis with some of the largest 3D printer companies in the world. Long-time heavyweights such as Stratasys and 3D Systems have recently re-entered this market. As a result, 2019 printer unit shipments were +17% up on the previous year and this momentum continued into the first part of 2020. The sector saw additional demand from consumers and hobbyists unable to purchase Personal printers, and growth was possible because key vendors in this sector are less reliant on Chinese components meaning supply-chain limitations had little impact.
Personal price class
While finished-good printers in this class have recently been losing ground to even cheaper build-it-yourself kits (such as those from Creality3D and from Prusa Research), demand boomed in Q1 2020. Some of this came from engineers and designers working from home, but more came from hobbyists, particularly in the US and Europe. These were people eager to find new hobbies to try while quarantined, or/and who wanted to produce whatever PPE they could: for example, by printing simple face shields which, while not meeting the rightly stringent needs of medical institutions, could support others in the local community.
Chart 1: Quarterly global finished-good 3D-Printer unit shipments by Price Class (note individual scales) (Credit: CONTEXT)
Looking forward
Production of the lowest-priced Personal printers was already rebounding quickly in May and June, and there are reports of new hires being made in factories from China to the Czech Republic to help fulfil unmet demand. This production explosion points to a V-shaped recovery for shipments of this type of printer. Shipments of Professional 3D printers have hardly skipped a beat during the pandemic, and growth in the class is expected to continue. The impact of COVID-19 on key vertical markets for Industrial and Design printers was still severe in the second quarter and, with fears of a resurgence of the virus continuing to affect the decisions such businesses are making about capital expenditure, the trough in demand will, potentially, be more prolonged. Shipments of new products from the likes of Desktop Metal, Xerox and Stratasys, and the general trend toward strong purchasing in the fourth quarter, leave Industrial 3D printer vendors hopeful for a rebound in the second half of the year. It also looks as if interest in binder jetting for metals – in machines such as those currently offered by ExOne and Digital Metal and, in the near future, to come from GE Additive, Desktop Metal and HP – will aid the turnaround.
While increases may take a while to materialise, forward-thinking companies are expecting a U-shaped recovery in printer shipments and are already betting on a future demand surge. Investments in new companies and new technologies – such as the private equity money raised by rising metal company VELO3D – give strong indications that the outlook for long-term post-pandemic growth is bullish. The 3D printing market has also benefitted from increased public awareness during the crisis, as companies demonstrated the flexibility of the technology by quickly pivoting production, and this supports expectations that a demand bump will emerge in time, no matter when the near-term recovery takes place.
Chart 2: Historical and forecasted revenues from global printer shipments by class ($M) (Credit: CONTEXT)
* 3D printer price classes: Industrial ≥ $100K, Design = $20K-$100K, Professional = $2.5K-$20K, Personal ≤ $2.5K (excludes DIY kit printers)
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