Key takeaways

• Funding
  • Q3 volumes fell despite an uptick in DT investments: The sector’s overall funding fell 25.7% YoY to USD 382 million owing to a sharp decline in Mining Tech (down 98.9% YoY), Smart Factory (down 52.7% YoY), and AM (down 22.0% YoY) funding. Lower funding could be reflective of a slowdown in the industry in a quarter that saw layoffs, bankruptcies, and industry consolidation. However, DT investments rebounded as funding rose 20x YoY, led by Hayden AI’s and Seeq’s growth funding rounds to invest in product development and growth initiatives. 
• Partnerships 
  • Metal AM, AI, and improvements in robotics remained central themes for partnerships; adoption of technology in healthcare continued: Similar to the last quarter, AM partnerships were the most prominent with 1) metal-AM-related developments (end-to-end solutions and improvements to elements of the metal AM manufacturing process), 2) continued development of AM solutions for the aerospace and defense and healthcare sectors, and 3) sales partnerships to expand global footprint persisting. 
  • New partnership themes emerged in DT and Smart Factory: These included DT partnerships on urban planning and transportation (Flow Labs and VIZZIO launching traffic management and smart city solutions, respectively) and Smart Factory partnerships to integrate robotic software to improve automation (Comau improving robotic simulations). Continuing trends observed included 1) DT developments in healthcare, 2) GenAI-based DT improvements, 3) DT adoption in oil and gas, and 4) incumbents launching AI-based smart factory solutions.  
• Product updates
  • AM drove product updates; design and post-processing solutions were launched along with new materials and printers: 3D print volume, size, and speed, together with new print materials, continued to be the focus this quarter. Rapid Fusion launched a system for faster production of large parts, Markforged offered a KIT for faster printing and larger print volumes, Fugo Precision offered a printer that delivers 10x faster throughput, while 6K Additive expanded its metal powder portfolio and Formlabs launched a dental and clear cast resin. We also saw several developments targeting design and post-processing elements, building on last quarter’s momentum. Meanwhile, DT updates were driven by maintenance solutions being launched for various sectors, while robotics-related developments drove Smart Factory updates. 
• M&As
  • Horizontal integrations drove M&As: We counted six major M&A activities in the Advanced Manufacturing space during the quarter, primarily driven by AM (four activities), with acquisitions used to expand 3D printer offerings and enhance 3D printing service capacity. Meanwhile, Smart Factory continued the horizontal integration trend from last quarter with an acquisition to expand its customer base and market share. DT also saw just one activity, where Bentley Systems acquired Cesium to enhance its building design and monitoring DT platform. This was a notable change from the last quarter where DT acquisitions were limited to the technology being leveraged by other industries. 
• Regulations
  • Military funding and adoption boosts advanced manufacturing tech: Government funding for Advanced Manufacturing industries continued; most notably, the US Air Force awarded contracts worth USD 975 million to develop advanced manufacturing technologies, while the Department of Energy engaged in multiple funding programs for smart factory tech. The AM industry also benefited from the continuation of two key trends: 1) partnerships with the military for AM adoption and 2) regulatory approval for solutions in healthcare. However, tightening export regulations for military-related AM solutions could hinder the expansion of the industry since most defense-focused developments in AM are restricted to the US.  
• Outlook 
  • AI and GenAI to continue disrupting advanced manufacturing, primarily in Smart Factory: Smart Factory has seen a steady flow of AI-based developments through partnerships and product updates. Recently, we saw AI commonly leveraged for analytics, advanced robotics, preventive maintenance, and defect detection. Meanwhile, GenAI has been used to help users develop automation code using natural languages, generate insights from operational data, create collaborative robots, and for predictive maintenance. Although GenAI has been more pronounced in Smart Factory, we have also seen it make its way to DT (to create a more immersive DT experience, improve simulations, and for remote operations controls) and AM (to offer advanced design capabilities and greater user support). Accordingly, we are likely to see similar developments going forward, as companies partner and enhance their products to realize the full potential of AI.
  • AM developments to span across the value chain, with a focus on metal AM: We are likely to see AM product developments, partnerships, and M&A continue to span across the value chain rather than being only focused on production improvements, since design and post-processing also remain challenges to AM adoption. Meanwhile, metal-AM-related developments remain a key focus as metal usage in AM can be hindered by manufacturing speed, cost, and scalability. Notably metal remains important in several industries, as steel was reportedly the second-most consumed raw material in the world in 2023.
  • AM demand in defense to rise, supported by continued funding from military organizations: US government organizations have been investing in defense-based AM solutions consistently in recent times. For instance, US defense organizations have funded multiple AM projects since 2023. Moreover, during that period, disruptors such as JuggerBot 3D, 6K Additive, and Materion Corp, among others, received funding from military-affiliated organizations. Meanwhile, several companies (such as 3YOURMIND, AML3D, NUBURU, and Velo3D) entered partnerships and/or met compliance requirements to offer defense-related AM solutions. Most recently, SPEE3D and AML3D partnered with US military organizations to offer AM solutions that address supply chain-related constraints for military parts.