Chris Connery, VP of Global Research at CONTEXT
Regional quarantines took their toll on much of the 3D printer industry in Q1 2020, although some product categories were more affected than others, according to the latest research from CONTEXT, the technology market intelligence company.
A combination of paused customer operations, logistics challenges and Chinese supply issues impacted different printer categories in different ways.
While not hampered by supply-chain issues per se, the Industrial and Design markets were indeed impacted as key vertical end-markets were all but closed down for example. The pause in operations in these critical end-markets resulted in double-digit year-on-year decline in shipments of Industrial (-30%) and Design (-37%) products.
Conversely, Personal and kits markets saw rising demand but were heavily impacted by supply-chain disruption. The rising Personal kits market was the most hard-hit by production issues with some vendors seeing shipments fall by as much as -75% on the previous year. The non-kit Personal market also saw increased demand as hobbyists looked for a way to fill their time over the lockdown and produced PPE equipment, but shipments for this sector were held back by production lockdowns in China. Shipments fell 38% here year-on-year.
One positive was the Professional price class, which saw a 12% increase in shipments compared to a year ago.
“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”, explained Chris Connery, VP of Global Research at CONTEXT.
Industrial and Design printers in decline
Accounting for 68% of global 3D printer hardware revenues in 2019, the Industrial price class was already fighting headwinds at the start of 2020 when customers in many key end-markets – including automotive, aerospace, dental, healthcare, consumer products, movie props and education – were effectively closed down.
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 to help with final installations. New printer shipments in this class dropped -30% from Q1 2019.
The impacts to shipments and demand was not uniform across the industry however with some companies indeed reporting Y/Y shipment increases. Some vendors, typically those selling €850k+ printers which have long lead times, reported shipment increases based on opportunities booked last year.
It was a similar picture for Design class printers, where key end-markets, such as jewellery and dental businesses, were all but shut down, severely impacting demand. This class of printer is often used for prototyping, but many companies quickly halted R&D and paused purchases of expensive equipment.
A work-from-home surge
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.
The sector saw additional demand from consumers and hobbyists seeing shortages of lower-priced Personal and Kit printers, and growth was possible as key vendors in this sector are less reliant on Chinese components.
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, while shipments of Professional 3D units are expected to continue growing.
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 second wave of infections creating business uncertainty, the trough in demand could be more prolonged. However, shipments of new products from the likes of Desktop Metal, Xerox and Stratasys, the general trend toward strong purchasing in Q4, along with rising interest emerging technologies like binder jetting for metals, keep Industrial printer vendors hopeful of a 2H 2020 turnaround.
Analysis from Chris Connery suggests that the 3D printing market has benefited from increased public awareness during the crisis, supporting expectations of a demand bump emerging in time.
“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”, he added. “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.”