Have 3D printer makers found sweet spot?

Bloomberg

3D printing has long been a cool technology in search of a huge market. The industry may have found one in mass production.
Because of its high cost and slow pace, 3D printing’s use in manufacturing has been limited mostly to prototyping, making plastic molds for teeth alignment and creating tools. That may be about to change, potentially lifting the shares of printer makers 3D Systems Inc. and Stratasys Ltd. after a long slump.
HP Inc. will introduce a $130,000 printer later this year, which it says can make parts at half the expense and at least 10 times faster than rival printers — and likely use lower-cost materials. While HP’s entry could be a competitive blow, it may also help expand the market for 3D mass production, where other printer companies have already turned their focus.
Jabil Circuit Inc. plans to be an early adopter of HP’s device, printing end plastic parts for aerospace, auto and industrial applications that it currently makes using processes such as injection molding, John Dulchinos, vice president of digital manufacturing at the electronics-manufacturing service provider, said in an interview.
“We have use cases in each of these segments,” Dulchinos said. “Parts that are in hundreds or thousands or tens of thousands of units — it’s cheaper to 3D print them than mold them.”
HP’s technology may usher in a new era for the industry. Production applications for 3D printing could eventually grab at least 5 percent of the worldwide manufacturing economy, and translate into $640 billion in annual sales, according to Wohlers Associates, which has tracked the 3D printing market for 28 years.
“It’s one of our anchor businesses we’ll divert money on,” HP Chief Technology Officer Shane Wall said in an interview. “It’s a very high strategic value for us.”
3D Systems Chief Executive Officer Vyomesh Joshi, who joined the Rock Hill, South Carolina-based company in April after more than three decades at HP, said on a conference call that his business is evolving from prototyping to “light production.” The shares rallied 18 percent
after the company posted second-quarter earnings that beat analysts’ estimates and said its profit margin increased from a year earlier partly as it shifted away from consumer products.
A few years ago, the industry had banked on putting a 3D printer in every home — yet that market never materialized as consumers found the devices fragile, expensive and snail slow.
That bet proved torturous to 3D Systems and Stratasys, both of whose shares plunged about 85 percent since the beginning of 2014. More recently, the stocks have been under pressure by a slowdown in sales for prototyping applications as customers delay purchases to evaluate new products from companies like HP, said Robert Burleson, an analyst at Canaccord Genuity.
Eden Prairie, Minnesota-based Stratasys, which reports second-quarter earnings on Thursday, has refocused research and development on production for the past 18 months, Chief Business Officer Josh Claman said in an interview. He said changes to the industry are happening “even faster than we thought.”