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By Charith Gunasekara · Apr 9, 2024
Advanced Manufacturing (Q1 2024): Partnerships and product updates drive activity despite funding decline
This Edge Insight focuses on the notable activity relating to four SPEEDA Edge industries under the Advanced Manufacturing vertical—Smart Factory, Additive Manufacturing (AM), Digital Twin (DT), and Mining Tech—from January 2024 through March 2024 (Q1 2024).
Key takeaways
- Funding
Q1 volumes fell significantly in AM, DT, and Mining Tech, but Smart Factory saw a recovery: The sector saw overall funding fall 25.2% YoY to USD 381 million due to a decline in fundraising for Mining Tech (down ~46% YoY), DT (down ~56% YoY), and AM (down ~74% YoY). Despite the general downward trend, Smart Factory saw upticks in investment, with funds raised during Q1 2024 increasing 11.1x YoY to ~USD 148 million, as two-thirds of the companies raised seed and early-stage funding, with Viam leading the way.
- Partnerships
Product partnerships remained most common; Siemens drove activity: Product partnerships accounted for more than half of all Advanced Manufacturing partnerships in the quarter. Incumbents remained present in the Advanced Manufacturing space, with Siemens accounting for ~22% of the partnerships. Regarding industries, AM led the way with ~41% of the partnerships, driven by metal AM-related developments. DT partnerships continued to be driven by growing adoption in mobility and energy industries, with several GenAI-related developments in the industry led by NVIDIA and Microsoft. Meanwhile, disruptors utilized sales partnerships to expand their geographic footprint across all hubs and were the main drivers of Smart Factory partnerships.
- Product updates
AM product updates centered on new printers and materials; AI took center stage in DT and Smart Factory updates: Product updates were evenly distributed between the three main hubs during the quarter. AM product updates, such as those by FormLabs, continued to center on the launch of new materials and printers, as studies have indicated that material availability and design accuracy are among the main challenges for adoption. Meanwhile, Smart Factory and DT had several AI (including GenAI)-related developments, such as external AI (products and software leveraging AI via external connections and foundation models) and embedded AI (products and software with AI embedded within their core functionality) solutions.
- M&As
AM and Smart Factory drove M&A activity, as players sought to improve existing offerings: We counted eight major M&A activities in the Advanced Manufacturing space during the quarter, with AM accounting for five and Smart Factory accounting for the rest. Activity in the AM industry was driven by companies looking to enhance their existing AM offerings by boosting functionality and commercial applicability; Prototal also leveraged an acquisition to add metal AM capabilities. Meanwhile, Smart Factory’s activity was driven by Siemens and ABB, each engaging in an acquisition to boost autonomous mobile robot (AMR) offerings.
- Regulations
The FDA granted approval, while other government organizations provided funding for advanced manufacturing solutions: Several organizations affiliated with the US Government undertook positive initiatives to boost the Advanced Manufacturing space. This included the FDA approving DT company InHEART’s AI-based software module, and organizations such as the Under Secretary of Defense, Research, and Engineering Manufacturing Technology (OSD[R&E]), the US Army, and the National Institute of Health (NIH) funding AM startups.
- Outlook
- Partnerships and product updates should continue driving activity: Partnership and product updates will likely continue to drive Advanced Manufacturing activity. Embedding GenAI to products and solutions will likely remain in focus (we saw GenAI making its way into the DT space this year, after a subsequent entry into Smart Factory and AM industries last year). Partnerships with industry leaders will continue—primarily in AM—as collaborating with customers remains key. For instance, Stratasys established a 12-member customer advisory board comprising leading manufacturers to drive AM collaboration and innovation. Meanwhile, to expand geographic expansion, we are also likely to see a continuation of the sales partnerships, such as Meltio’s several collaborations over the past year.
- Expansion in the metal AM space: Metal AM adoption has been backed by defects relating to materials (thermal conductivity, strength, corrosion resistance, etc.) and printers (melting points, print bed temperatures, and nozzle specifications). Given the importance of metals in several industries, it is likely that we will continue to observe partnerships, product updates, and M&As toimprove metal AM solutions.
- AM demand in defense to increase: We saw several US government organizations investing in defense-based AM solutions throughout 2023. Notably, the OSD(R&E) funded AM disruptor JuggerBot 3D and the US Army provided a USD 50 million grant to Auburn University during the quarter, indicating continued government interest. This should benefit players developing defense-based AM solutions by enabling them to access funding and expand operations.
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