Lux Populi

The Lux Research Analyst Blog

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The 3D Printed Part Market Will Reach $7 Billion in 2025

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Currently, 3D printing’s largest applications are for making prototypes, molds, and tooling. Direct production of end use parts, however, is beginning to grow in industries including aerospace, medical, automotive, consumer products, architecture, and electronics. The coming decade will see both growth and disruption in the diverse 3D printing landscape, with the total market for 3D printers, printable materials, and printed parts reaching $12 billion in 2025. This is comprised of $2.0 billion in formulated materials and $3.2 billion in printers, but the highest share will reside in $7.0 billion of part production value, growing at a 21% CAGR from only $684 million in 2013.

While prototypes, and molds and tooling have respectable growth rates, the most robust growth is production parts, growing at a 36% CAGR from $81 million to $3.2 billion over this time period. This will vary significantly across applications. Medical applications  – such as surgical tools and orthopedic implants – will take off from $6 million in 2013 to $391 million in 2025, a 42% CAGR, driven by the high value of customization in this market, such as prosthetics and implants that can be readily fit to individual patients or their injuries. Small-volume automotive applications, such as parts for high-end vehicles as well as replacement parts for vehicles no longer in production, will reach the market in 2015, but rise quickly to $695 million by 2025. Aerospace, an early leader in industrial adoption will remain important, but longer product growth cycles won’t keep pace with the slightly later to adopt industries. Aggregated applications also exist in consumer and architectural segments, a list that will no doubt increase as developers target a broad swath of potential applications, each of which may or may not pan out. These include customized sporting goods, on-site military or offshore oil and gas production of replacement parts, direct production of consumer electronic devices by 3D printers, or even manufacturing objects in space using local materials such as moon rocks or asteroids.

Certainly there is opportunity and robust growth to be harvested in the 3D printing value chain, although still not enough to match the hype. Current or prospective market participants should also prepare for on-going flux as the landscape solidifies. While the leading 3D printer companies’ razor/blade model – developed to address prototyping – could inhibit growth, emerging third party material suppliers and equipment manufacturers with more open models are beginning to challenge their dominance. This has been fueled by an onset of patent expiration. In 2006, expiration of several early FFF patent families enabled the emergence of low-cost desktop printers from new suppliers and corresponding popular interest in the technology. In early 2014, U.S. patent 5,597,589, a foundational patent for SLS, expired. This is bound to result in increased competition among industrial SLS printer suppliers to follow as new entrants come to market. Beyond these disruptions to incumbency, traditional design tools are unwieldy and inadequate leaving room for emerging intuitive design tools that will point the way to more efficient part design.

The opportunity in 3D printing is clear, but all value chain participants will need to stay pragmatically nimble to keep pace with the materials, processes, parts and applications on its decade long journey to $12 billion.

Source: Lux Research report “How 3D Printing Adds Up: Emerging Materials, Processes, Applications, and Business Models” — client registration required.

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Ammono-Unipress Hybrid GaN Process Looks Very Promising; Commercial Viability Needs to be Proven

What They Said

Ammono and the Institute of High Pressure Physics of the Polish Academy of Sciences (Unipress) recently announced that they have developed a hybrid ammonothermal-hydride vapor phase epitaxy (HVPE) process to produce low-dislocation-density gallium nitride (GaN) substrates. The traditional HVPE process is a two-chamber process using sapphire as the seed crystal while the traditional ammonothermal process is a single-chamber process using GaN substrates as the seed crystal; the details about this hybrid process were not disclosed. The partners claim that they have achieved smooth GaN layers up to 2.5 mm thick (crystallized with a stable growth rate of about 240 μm/hour) without any cracks, and at a dislocation density of 5 x 104/cm2 (which is about three orders of magnitude better than a typical HVPE GaN substrate dislocation density). They also used GaN wafers from this hybrid process as the seed crystals for Ammono’s ammonothermal process; the company claims that using a hybrid ammonothermal-HVPE seed crystal in a subsequent ammonothermal process still resulted in very low dislocation density of about 2 x 104/cm2.

What We Think

Ammono-Unipress demonstration of a hybrid GaN substrate process looks very promising especially in terms of rate of growth and dislocation density although its commercial viability remains unproven. The crystallization growth rate of 240 μm/hour is about 20x faster than that of the traditional ammonothermal process and can result in a dramatically more cost effective process – about 40% cost reduction overall. The dislocation density achieved in the hybrid GaN wafer is only slightly worse than the 2 x 104/cm2 that can be achieved using the ammonothermal process further validating the promise of such a hybrid approach. Ammono (client registration required) is also currently participating in one US Department of Energy (DOE) Advanced Research Projects Agency-Energy (ARPA-E) project under the Strategies for Wide-Bandgap, Inexpensive Transistors for Controlling High-Efficiency Systems (SWITCHES) program with Kyma to develop a similar hybrid manufacturing approach.

GaN substrates with such low dislocation density are especially attractive in not only lasers but also high-voltage power electronics applications that typically mandate a vertical device structure (see the report “Price or Performance: Bulk GaN Vies with Silicon for Value in LEDs, Power Electronics and Laser Diodes” — client registration required). Until now, the prohibitively high costs of GaN substrates have prevented their use in power electronic devices in power electronics – should this process become commercially viable, that scenario could change quickly; clients should continue to scope out for investment opportunities in GaN substrate players such as Ammono and Fairfield Crystal (client registration required.)

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Wearable and Distributed Computing Will Hit $45 Billion in Revenue by 2033

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Devices like smartphones and tablets have created a revolution in how people connect with the world and each other, all while providing a gradual evolution and convergence of features. In contrast, the devices of tomorrow will see dramatic innovations in the user experience, including improved wearability, added biosensor functionality, and seamless connectivity. Overlaying all device adoption trends from today’s and tomorrow’s devices, it is clear that the emergence of the latter does not necessarily come at the cost of dramatically shrinking market share for the former. Although tablets will continue to cannibalize notebook PC sales, other devices remain strong, often in concert with each other as opposed to being in competition.

Around 2018, smart watches and other accessories, such as fitness bands, will make an increasing impact, but remain in many ways dependent on the paired functionality of an evolved smartphone. After a slow start out of the gate, smart watches will grow quickly from 2016 through 2020, reaching 0.7% installed base and a market size of $3.6 billion but never matching the ubiquity of smartphones and tablets.

By 2023, wearable devices will emerge, appearing no more complex than a plastic wristband and ring, but able to identify the wearer and coordinate interaction with all shareable devices in the area. Wearable devices will take advantage of distributed screens, for example, which in most cases will feature their own power source, processor, and so forth. This device-to-device interaction will enable much more sharing and merging of technology once OEMs agree on interoperability standards, and by 2033 wearable devices will reach the mainstream, enjoying an installed base of 41% and peak revenues around $14 billion.

In 2028 “invisible” computing will enter the mainstream with a class of devices that offer a seamless and wearable user experience, by virtue of innovations in flexible and robust materials and innovative inputs like electroencephalography, electrocardiography, and galvanic skin response, along with advanced speech recognition and gestures. Rather than a single unit, invisible computing will consist of an adaptable network of devices that change according to consumer needs on monthly, weekly, daily, and even hourly timeframes, and adding up to a $27 billion market in 2033.

Innovation in consumer electronics will continue to create major new businesses, but more than ever the devices will rely on new technologies, like robust flexible materials and curving displays and batteries, along with software innovations that enable sharing and interconnectivity across OEM brands and systems. The entire value chain, from materials to OEMs, have opportunities to drive disruptive innovation to market in advanced materials, energy storage, display technologies, biosensors, and more. Those that partner effectively and integrate efficiently will have the clear advantage.

Source: Lux Research report “Building the Devices of Tomorrow: Electronics Shift to Wearable and Distributed Computing” — client registration required.

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UK Doctors 3D Print Patient a New Face

Doctors in the UK recently used computer-aided design (CAD) software and 3D printed components to reconstruct the face of a motorcycle crash survivor. Dr. Adrian Sugar, a consultant maxillofacial surgeon at Morriston Hospital in Swansea, U.K., where the surgery took place, said, “[W]e produced guides at each stage of the surgical process, not only to cut the bone but to reposition the bones, and then we had custom implants 3D printed.” The surgical team spent months planning the procedure, which included taking scans of the patient’s face, creating a software model of his head, designing scaffolds to be used during the surgery, and the final implants. Dr. Sugar said that the team took extra care to document and design a repeatable process that would enable much shorter turnaround time for future surgeries. He added, “We’re talking maybe days as opposed to months. The ultimate aim is to undertake planning and be able to use custom-made guides and implants on a routine basis.”

As 3D printing makes a splash across multiple technology areas, one of the most promising could be medical implants and prosthetics. As mentioned in the report “Building the Future: Assessing 3D Printing’s Opportunities and Challenges” (client registration required), companies including Oxford Performance Materials (client registration required) and Arcam (client registration required) have already received U.S. Food and Drug Administration’s (FDA) 510(k) clearance for the use of their 3D printed materials for orthopedic and cranial implants. The ability to customize and quickly redesign 3D printed components has a specific added value for orthopedic implants and prostheses that need to be custom fitted to each patient. To this point, 3D printing has been restricted to passive medical applications. However, the emergence of 3D printing systems like those developed by Optomec (client registration required) that can deposit metal and plastic concurrently could enable the production of customized active implants – e.g. pacemakers, insulin pumps, and neurostimulators. Clients interested in new approaches to medical therapies should consider engaging with players in the 3D printing space that have a proven record of regulatory compliance, while steering clear of companies that claim medical applications with no proven track record.

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Wuhan University Leads the Fundamental Research of Shale Gas Development Under National “973″ Program

A national “973″ research project, supercritical carbon dioxide (CO2)-enhanced shale gas development, commenced recently. Academician Xiaohong Li at Wuhan University was assigned as the primary investigator (PI) in collaboration with other universities and institutes, namely, Chongqing University, China University of Petroleum, Southwest Petroleum University, Institute of Rock and Soil Mechanics-Chinese Academy of Sciences, and Sinopec Research Institute of Petroleum Exploration, as well as an industrial entity Sinopec Jianghan Oil Field Company. The government-funded research project will focus on the use of supercritical CO2 fluid to assist in shale gas exploration and production, especially on the key technologies such as supercritical CO2-enhanced rock breaking, fracturing permeability, and shale gas displacement, among others. The ultimate goal of this fundamental study is to develop a theoretical system and technology of high-efficiency shale gas exploitation.

To achieve the shale gas target (client registration required) set in the 12th Five-Year Plan, 6.5 billion m3 per year in 2015, the Chinese government is working on the promotion of shale gas by involving private-sector players in the government-led shale gas tenders (client registration required), encouraging shale gas exploration joint ventures (JVs) between state-owned enterprises (SOEs) and non-SOEs (client registration required). Furthermore, the government is enhancing the application of natural gas, to replace coal, in both energy supply and transportation markets under the worsening air pollution nationwide (client registration required).

As one of the most important national research funding programs, the “973″ Program, also known as National Basic Research Programs of China, is supported by the National Science Foundation of China (NSFC) to drive primarily fundamental research projects and usually supported at the levels of tens of millions RMB. More importantly, it is focusing on the research fronts and leading edges related to the national strategy. In this sense, the launch of the shale-gas specialized fundamental research project indicates the additional effort Chinese authorities put on the theory and technology development of the shale gas sector. One notable thing related to this “973″ project is the active engagement of Sinopec via its research institute and subsidiary, which again proves Sinopec is a step ahead in shale gas exploration technology (client registration required). Hence, clients seeking opportunities in the emerging shale gas market of China should consider engaging leading academic and industrial players as mentioned, to penetrate and preposition in a changing energy landscape of China, yet treat them as potential technology competitors as well. In the meantime, Lux will keep a close track on the shale gas technology development and progress made by leading Chinese players, and analyze the consequent influence and impact on foreign technology providers.

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Biopesticides Grow Past $4.5 Billion by 2023

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Agricultural production relies on technology for increased yield and strong yield stability. In the face of climate change and concerns over agriculture’s environmental impacts, alternative “greener” technologies emerge as potential routes to alleviate these concerns. Often these technologies are specific replacements for individual technologies. Biopesticides are a “green” alternative for chemical synthetic pesticides. No-till farming is a “low-impact” alternative to intensive tilling agriculture. Biochar presents a biobased alternative to fertilization and soil amendment. While these approaches may be technologically promising, not all are legitimate financial opportunities. No-till farming is poised for growth, but the market opportunity is small, while biochar has potential, but needs a champion and a little luck. In contrast, while biopesticides have historically represented a small market, growth that will endure is already a reality, buoyed up by multiple factors.

Recent legal changes are paving the way for biopesticide development and use over synthetic pesticides. From the EU to the U.S. and India, regulations and consumer sentiments are driving investment in biopesticides and adoption of those products. As an example, growth in the EU will occur most rapidly in the face of the neonicotinoid ban beginning in 2014. This regulatory pressure will drive adoption more rapidly than in other geographies, and the market will be larger by 2023 as a result.  The environmental impacts of biopesticides are much smaller than their synthetic counterparts. Biopesticides enjoy very short re-entry intervals for treated areas and often require very small doses for effective treatment. As such, we expect this market to grow at more than 8% CAGR through at least 2023. Innovations in the field coupled with swelling consumer sentiments against synthetic pesticides will push more and more adoption of these products in the future. This creates growth opportunities for those looking to make a play here.

Vestaron is an excellent example of a multi-pronged approach that advances a biochemical biopesticide, a transgenic PIP, and a synthetic pesticide at one time. Others in the field should try similar multi-faceted approaches to be resilient to changing consumer demands. Other novel biopesticide varieties will also claim increasing market share. Specifically, biologically-sourced small molecules have a better ability to achieve specific control of individual insect pests, weeds, and even fungal diseases. Morflora’s technology, which uses nontransgenic approaches to impart resistance to myriad pathogens and pests via PIPs, is a model for future biopesticide development.

Biopesticide developers and aspiring market entrants should consider acquisitions now, not later, to get a piece of the opportunity. The existing market is flooded with small-scale developers; many of them offer a single product. As the industry matures, these small-scale developers will rapidly realize growth and success, increasing the potential purchase prices of these start-ups by significant margins. Those seeking to innovate externally should act now to make their selections, rather than waiting and having to pay more for new products.

Source: Lux Research report “Green Dreams or Growth Opportunities: Assessing the Market Potential for “Greener” Agricultural Technologies” — client registration required.

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Setting the Record Straight on Natural Gas Fuels

From the day the Model-T entered the consumer market, oil has firmly held its position as the king of transportation fuels. The widespread availability of oil derived fuels such as diesel and gasoline has made it the natural choice for powering heavy equipment and machinery on the oil field. However, the shale gas revolution has transformed the North American energy landscape in just a few years, dropping natural gas prices to record lows. The price of natural gas itself is not as important as its price relative to oil, and today, that gap is wider than ever.

Many companies are attempting to capitalize on the gap. The oilfield services company CanElson Drilling bought CanGas Solutions (client registration required) to power their equipment using compressed natural gas (CNG). In 2012, Seneca Resources announced it would convert their drilling rigs from using diesel to cleaner burning liquefied natural gas (LNG) (client registration required.) Sasol plans to invest up to $14 billion on a gas-to-liquids (GTL) facility in Louisiana that would produce diesel, in addition to other petroleum derived products. There are many unique pathways that convert natural gas to a transportation fuel.

The three main competing natural gas based transportation fuels are CNG, LNG, and liquids produced from GTL processes. Each has its own merits (see the report “Shale Takes on Automotive: The Future of Natural Gas Vehicles” — client registration required).

  • Of the three, CNG is the simplest and least expensive to produce. It involves compressing methane to about 1% of the volume it occupies at atmospheric pressure. It is often stored at 21 °C and 3,600 psi.
  • Liquefaction involves super-cooling natural gas to about -160 °C and 14.7 psi. Production and storage of LNG is more energy intensive than it is for CNG; however, LNG occupies less than 0.2% of the volume of natural gas at room temperature. Still, diesel remains 1.7 times more energy dense than LNG.
  • Though large-scale GTL technologies are established just like LNG and CNG processes, the challenge is in scaling these down so it can utilize associated and stranded gas. GTL plants are capital intensive (~$100,000 per barrel of daily capacity). Unlike CNG and LNG, GTL produces a drop-in fuel, and does not require an infrastructure overhaul. Efficiencies for GTL plants range from 40% to 70% and can produce a range of fuels and chemicals.

These differences have led each natural gas based fuel to find its own way into the fuels market. Most of the 17.7 million natural gas vehicles on the road use CNG; largely the the only available passenger vehicles in the U.S. run on CNG, but the long-haul trucking industry prefers LNG because of its higher energy density. Oil companies are attracted to the prospect of using low-cost “waste” natural gas instead of high-cost diesel for their drilling rigs, and companies such as REV LNG, Prometheus Energy, and Halliburton are leading the way. GTL processes require permanent and capital-intensive plants, forcing companies like G2X (client registration required), and Sasol to bet on long-term price discrepancies between two commodities. Even the smaller-scale GTL plants from companies like Velocys (client registration required) and CompactGTL (client registration required) are much larger than the typical CNG/LNG fueling stations.

Despite the current low price of natural gas in North America, oil will continue to reign over the trillion-dollar transportation fuels market. Natural gas fueling infrastructure is not as ubiquitous as gasoline/diesel, and consumers need to sacrifice trunk space to fit the larger gas tank to account for the lower energy density. Because of these barriers, natural gas vehicle adoption has been slower than the fuel price spread would suggest. However, emerging technologies that convert raw natural gas into a consumable fuel offer a way for oil producers to cut costs, while generating revenue for technology developers.

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Flax Oil as the New Omega-3 Source

The recent ruling by Health Canada, the Canadian equivalent of the US FDA charged with overseeing food and nutrition, that approves the claim that flax diet reduces cholesterol, is expected to drive the market for flax seed and flax seed oil. The ruling, coming after two years of study following a claim for allowance regarding therapeutic benefits, followed after a meta-study examination of eight clinical studies using an average 40 gram daily diet of ground flax seeds in hypercholesterolemic patients. The metastudy concluded that both total cholesterol and LDL cholesterol were lowered in pooling data from the eight studies.

The implications for market expansion for flax are significant since in its ruling Health Canada also noted that 39% of all Canadians between the ages of 6 to 79 have unhealthy cholesterol levels. Canada has a population of approximately 39 million people; assuming 90% of them fall within this age range and assuming a diet of 40 g per day as recommended, this would result in a potential 220,000 tons of annual demand within Canada for health and wellness reasons.

Flax as a source of essential oils has over the past 10 years been flagged as an alternative to fish oils, based on their availability, cost to produce, and potential for higher purity extracts. However, it has lagged behind fish-derived omega-3 oils in terms of claims and marketing. This new ruling will undoubtedly strengthen flax’s competitive positioning in the market place.

The fish oil nutraceutical market is now over $1B in annual sales. Companies such as BASF have increasingly raised the stakes and benchmarks for this market with its acquisition in 2012 of fish oil omega-3 producer Pronova for $844M, and its subsequent acquisition of Equatec, another concentrated fish oil omega-3 producer for an undisclosed sum in order to gain access to its novel chromatographic technology to produce ultrapure oils. These come after BASF’s initial foray into fish oils via its acquisition of Cognis in 2010 for €3B.

It is of interest to note that BASF stands at the threshold of the pharmaceutical industry, as Pronova is the primary producer of GlaxoSmithKlines’ blockbuster drug Lovaza for the treatment of hypertriglyceridemia. Thus the line between food and pharmaceuticals continues to blur as we’ve noted before. A leitmotif we expect to see increasingly in the future is food as pharmaceutical; evolving along the path of; food to extract to increasingly purified and therapeutically active extract to final purified active ingredient. The recent ruling on flaxseed oil will certainly give BASF and others in the chemical and pharmaceutical industries a run for their money.

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Coal is the Big Winner in 2017 as China Scales Alternate Paths to Ethanol Output

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China’s increasing transportation fuel demand and shortage in oil supply is creating opportunities for ethanol in China, with overall output in China growing at a CAGR of 27% from 2008 to 2012. Despite this remarkable growth, ethanol production is falling behind the ambitious E10 mandate put in place by the Chinese government.

Ethanol is currently dominated by conventional sugar fermentation technology but faces rising feedstock cost and dwindling subsidies due to agricultural pressure. In addition, nationwide air pollution issues are also stimulating China’s novel fuels market, including ethanol. Given a growth rate that isn’t being met and supply challenges associated with current processes, advanced ethanol technologies, represented by cellulosic materials and coal as feedstocks, are emerging in China. In earlier years, facilities adopting the advanced technology have been limited to demonstration sites, and output was virtually non-existent compared to conventional ethanol production. In 2012, several commercialized plants were approved by the Chinese government, but ethanol production from alternate feed stocks is expected to quickly increase in the next few years. Specifically, our models predict ethanol production from coal is expected to reach 720 million gallons per year (MGY) in 2017, 227 MGY from cellulosic materials, and 40.0 MGY from waste gas.

Large Chinese SOEs, such as COFCO and the “three big oils,” will continue their dominance in the fuel ethanol market for the next few years. However, more and more private-sector players, such as Shengquan, Laihe Rockley, and SOPO, among others, are entering the advanced ethanol field, particularly the cellulosic ethanol market. China’s growing fuel ethanol market is also whetting the appetite of multinational companies and international technology providers. In particular, Celanese, LanzaTech, Novozymes, Sojitz, and Hitachi Zosen, among others, are entering China’s ethanol market by partnering with Chinese SOEs to initialize and commercialize advanced ethanol facilities toward fuel application.

Of course, the role of government research funding, such as national “983,” ”863,” MoST pillar projects, and other provincial and municipal level incentives, should not be ignored. Knowledge transfer from leading Chinese research groups to domestic ethanol producers will greatly accelerate the industrial commercialization of ethanol production. This cross-fertilization between academia and industry is growing in prevalence in China making partnerships with leading Chinese researchers in the country a quality route to connecting with industry and government stakeholders.

Ultimately, scale economics as well as product composition will determine the viability and market opportunity for advanced ethanol technologies. The inevitability of increasing technology commercialization assures that advanced ethanol technologies will be real game-changers in China. The question for producers, consumers and technology providers alike is how to get a piece of the action.

Source: Lux Research report “Fueling China’s Vehicle Market with Advanced and Coal-based Ethanol” — client registration required.

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Foxxconn and Google Are Not-So-Quietly Working on Robotics

The Taiwanese contract manufacturer, Foxconn is reported to be working with Google on robotics. Andy Rubin, who ran Android for Google up until December 2013, has a new role as its robotics chief, and recently met with Foxconn Chairman Terry Gou in Taipei to discuss new robotics technologies. It is reported that Rubin asked Gou to help integrate one of the robotics companies that Google purchased in the past year. Google has had a tremendous string of acquisitions in the robotics space (listed below) that has fueled speculation as to what the company plans to do with its robotics technologies.

December 2013:

  • Schaft Inc., a humanoid robots company, which recently won a DARPA disaster relief challenge
  • Industrial Perception, computer vision systems and robot arms for loading and unloading trucks
  • Redwood Robotics, a robotic arms company, spun out of Meka Robotics and Willow Garage
  • Meka Robotics, a humanoid robotics company
  • Holomni, an omnidirectional robotic wheels company
  • Bot & Dolly, a robotic camera company used to film the movie, Gravity
  • Boston Dynamics, a military and industrial robot company that makes the world’s fastest robot, the Cheetah

January 2014:

  • DeepMind Technologies, an artificial intelligence company

In an interview with the New York Times, Rubin said that Google will seek to sell products sooner rather than later, but that it is unclear if the effort will be a new product group inside Google or through a subsidiary. He added, that robotics is a green field opportunity with a clearer near term product than Google’s autonomous vehicles research. “We’re building hardware, we’re building software. We’re building systems, so one team will be able to understand the whole stack,” he said. While Google’s exact manufacturing and hardware ambitions remain unclear, it is likely that Google software will be a key component of its robotics platform.

It’s clear that capabilities of autonomous systems and robotics have been demonstrated in the laboratory and in early products, but remain to be commercially established. The company believes it can be a galvanizing force in establishing a viable commercial robotics industry outside of process automation. While Google has been grabbing headlines through its ambitious robotics initiatives, it is not the only tech-company looking towards robotics. Amazon acquired Kiva Systems in 2011, which has automated much of its warehouse processing, and is even considering drone package delivery as reported in a recent “60 Minutes” piece. Additionally, home product suppliers like Dyson are investing in robotics technologies to integrate into household services. While a Jetson’s-like future may not be on the immediate horizon, it is clear that Google means business. Companies actively monitoring robotic materials, supplies, and autonomous systems technologies should act to establish a product and partnership strategy, or risk getting left behind.