A Promising But Struggling Sector
3D printing, aka ‘Additive Manufacturing,’ might be the most significant advancement in manufacturing techniques in decades, at least since the emergence of micro and nanoscale production, which created the current technologies we enjoy. This is because it promises to radically alter how we produce everything, from molds to spare parts, entire houses, rocket engines, and replacement organs. Among the potentially interested industries are:
However, 3D printing had a relatively slow start past the initial enthusiasm. This is because the technology needed to mature, and manufacturers needed to explore how they could deploy the technology to improve their products. Both processes are relatively slow, taking too long for the investing community’s attention span. This has led to financial issues for companies overextended or bet on the wrong technology.
As a result, the initial boom turned into a burst, which can only be described as a durable depression for the 3D printing industry. Most of the leading companies’ stock prices, including Stratasys (SSYS +9.92%) and 3D Systems (DDD +14.53%), saw their current prices go to 1/10th to 1/30th of their peak value in 2014-2015.
However, this has created opportunities for the industry to reorganize and become more efficient. It is a common phenomenon in new industries to see a consolidation phase after the initial boom of newcomers. And one company is now leading the “great consolidation” in 3D printing: Nano Dimension.
Nano Dimension Ltd. (NNDM +3.46%)
Nano Dimension
Nano Dimension is a 3D printing company that went public in 2015. The company started operating in a rather unusual corner of the 3D printing market: 3D printers for electronics.
This includes very specialized technologies like conductive or dielectric inks and ceramics. These can, for example, be used to build optical or radio components.
Nano Dimension has grown in this sector through a mix of acquisitions and internal R&D.
Source: Nano Dimensions
Nano Dimension has used the rebound in 3D printing stock valuation during the pandemic to raise a lot of capital, that it later on deployed in R&D and more recently, in a series of major acquisitions.
Chain Consolidation
Recently, Nano Dimension has acquired both its competitors, Desktop Metal and Markforged.
This news came on top of a messy tentative consolidation in the industry, with Stratasys being courted during all of 2023 for merger or acquisition by all its 3 large competitors 3D Systems, Desktop Metal, and Nano Dimension.
Stratasys would ultimately stay independent, at least for now. This is in line with a more general trend. The industry started to consolidate in 2022, with competitors acquiring at least 22 smaller 3D firms in that year alone.
Desktop Metal Acquisition
In the summer of 2024, Nano Dimension acquired Desktop Metal for an all-cash transaction of $185M-$135M.
Together, the 2 companies will have a much stronger position in metal and ceramic 3D printing at all scales, from electronics to large industrial equipment and aerospace. Merging the customer base, which includes SpaceX, Tesla, GE, Honeywell, Emerson, Raytheon, NASA, Medtronics, etc., will also create economies of scale.
Lastly, the two companies were mostly active in different geographic areas, with Nano Dimension in Europe and Desktop Metal in the US, allowing for synergy by merging their sales teams.
Source: Nano Dimension
The company claims it can reduce the ecological footprint of manufacturing, with a reduction of 94% in CO2 emissions, 100% in water, 98% in materials, and 82% in chemicals.
Overall, this merger will allow Nano Dimension to emerge as one of the technology leaders in the 3D industry, with a focus on high-growth segments and an extensive technology portfolio.
Source: Nano Dimensions
Markforged Acquisition
Just as the Desktop Metal acquisition was announced, Nano Dimension was clear it would not be the last one. This is now confirmed with the acquisition of Markforged for $115M.
In a recent interview, Nano Dimension and Markforged CEOs explained the rationale behind the recent acquisitions.
Source: Nano Dimension
As we explained, the Desktop Metal acquisition was focused on consolidating the technological position of Nano Dimension in metal and ceramic materials. Markforged fits into this pattern as well, with a focus on composite and metal additive manufacturing equipment.
“The beauty of this merger and the beauty of Markforged and their set of technologies is they’re not overlapping with our technology. The synergies are in the applications for similar companies.”
Yoav Stern- Nano Dimension CEO
The key element is that while working with the same material, the now-merging companies were operating in different market segments:
“Our solution is [targeting] higher-end applications and, as such, is more expensive and doesn’t fit the low-end applications which the Desktop Metal solution fits,”
Shai Terem – Markforged CEO
So overall, the company could become THE leader in metal 3D printing and 3-D printing-assisted metal casting, with an offer including metal-composite fusion, sandcasting at scale, binder jet metal printing, etc.
Source: Nano Dimension
The New Nano Dimension
Overall, the emerging company from the merger of Nano Dimension, Markforged, and Desktop Metal will need to do a lot of reorganizing. The first one will be to look into possible R&D synergies, as each company has come to different technological solutions for binder jet technology (used for ceramic and metal 3D printing).
“We’re going to work it out. We’ll probably find out that naturally, they have different applications because of certain specifics of each machine and what they can do – and each material and what they can do – and if not, we will adjust the R&D.
You can do binder jet in many different shapes and forms that will fit different applications. We’re going to expand our binder jet offering with the combined capabilities of the machines.”
Yoav Stern- Nano Dimension CEO
Similarly, the sales team will now need to integrate a much wider offer, potentially boosting the cross-selling options or reducing the need for overlapping account managers with some specific clients.
Because of the limited overlap of price range and technological capacity, there should not be too much “cannibalizing” of each other’s client list.
This will, however, be a very complex task. Each of the companies is operating from multiple locations, with very little overlap. This is true for R&D centers, manufacturing sites, logistics, etc. Luckily, it seems that the respective management teams are already considering they have a similar enough culture and already know each other:
“The top management of the three companies are friends. We share similar cultures, we have known each other for a long time, we speak the same language, we have no ego issues. We all decided and we agreed how to manage the head office together.
But that now has to trickle down to three companies and the three companies have operations in Switzerland, England, Germany, Holland, the United States, Israel, and Sweden. Good luck to all of us. But we’re going to do it. We’re going to make it happen.”
Yoav Stern- Nano Dimension CEO
In the long run, it is likely that each previously independent company will start to be turned into a dedicated branch, with a focus on specific technologies and their corresponding market fit, with some shuffling of personnel and IP between the branches.
Software & AI Integration
Through several previous acquisitions since 2021, including AdditiveFlow and GIS, as well as internal development, Nano Dimension has a solid position in software for 3D printing.
Source: Nano Dimension
Nano Dimension is also filing patent for LLM titled “Large Language Models for Efficient Anomaly Detection in Log Files of Industrial Machines”. This is an interesting niche case for an LLM, with machinery log files increasingly too complex to be analyzed efficiently or quickly enough by humans.
While machine logs are usually a valuable source of information for industrial systems, they are increasingly difficult and expensive to analyze as the underlying systems have grown in complexity and the volume of log data they contain has multiplied.
Furthermore, logs are typically analyzed after events have happened and not in real-time, thereby missing the opportunity to apply corrective actions.
This technology comes partly from Nano Dimension’s acquisition in 2021 of DeepCube deep-learning AI company.
For that matter, Markforged also acquired Teton Simulation in 2022, software to automate validation and optimize models for 3D printing, integrated into its Digital Force platform.
So overall, Nano Dimension is looking to have an extensive integration of industrial AI into its 3D printers, for which the R&D cost will now be split with Markforged and Desktop Metal while equally benefiting each of the 3D printers lines.
Source: Nano Dimension
Path To Profitability
No matter how impressive the technology is, investors need to be aware that per-acquisition Nano Dimension, Markforged, and Desktop Metal all had negative cash flows.
The resulting company will need to cut costs or grow sufficiently to turn a profit in the future. Both Markforged and Desktop Metal ultimately sold rather cheaply, as they were heading for financial difficulty cash-wise.
This should not be an immediate concern for Nano Dimension, as it expects to still have $475M in cash and cash equivalent when closing the Markforged acquisition. Meanwhile, Nano Dimension’s cash burn was “only” $11M in Q2 2024, down from $31M in Q2 2023.
3D Printing Industry Outlook
Nano Dimension’s serial merger with its largest competitor was made possible thanks to very clever fundraising at the right time during the pandemic.
Having gone public more recently in 2021-2022, both Markforged and Desktop Metal did not have that opportunity nor experience in handling the ups and downs of the 3D printing industry hype cycle.
This puts significant pressure on its competitors to also pursue mergers and acquisitions to get to a competitive scale.
More Mergers?
One extra potential target for Nano Dimension could be Stratasys (SSYS +9.92%), in order to acquire the 85% it does not own yet. However, at $523M in market cap, this would still be a very pricey acquisition for Nano Dimension. And after rejecting all bids in 2023, it seems the company’s management is not too interested.
Velo3D could also be a potential extra target, due to its focus on metal printing and advanced technology in PBF (power Bed Fusion) 3D printing. Especially as this would remove from the market a potential competitor in the metal 3D printing market.
Competition
Among the most likely serious serial acquirers in the industry to compete heads-on with Nano Dimension is 3D Systems (DDD +14.53%), which has already made 32 acquisitions since 2015, with an average acquisition amount of $75M.
Maybe a merger between equals with Stratasys (polymers) could be a renewed possibility to add to 3D Systems’ diverse 3D printing tech.
Investing In 3D Printing
3D printing is now reaching technological maturity, as well as market consolidation. This gives investors a little more visibility than in the past and confirms that this technology is far from a fad but is here to stay.
You can invest in 3D-printing-related companies through many brokers, and you can find on this website our recommendations for the best brokers in the USA, Canada, Australia, the UK, as well as many other countries.
If you are not interested in picking specific 3D printing companies, you can also look into ETFs like ARK Invest 3D Printing ETF (PRNT) to capitalize on the growth of the additive manufacturing sector as a whole. Or consult our articles “Top 10 Additive Manufacturing And 3D Printing Stock to Watch“, and “Top 10 Nanotechnology Stocks“.
