Thursday, April 28, 2016
Made-in-Taiwan Used to Mean PC, Now It’s 3D
by Bruce Einhorn
April 27, 2016 — 3:08 PM PDT
With consumers and businesses switching to smartphones, the PC market that has long dominated Taiwan’s economy is shrinking, and companies such as Acer are struggling. Taiwan’s exports in March fell 11.4 percent, marking 14 consecutive months of declines for Made-in-Taiwan products. The economy shrank 0.6 percent in the first three months of 2016 from a year earlier, according to a Bloomberg survey of economists’ estimates, the third straight quarter of contraction.
Fear of being left behind is a strong motivator for New Kinpo Group Chief Executive Officer Simon Shen. The Taipei-based group last year sold about $7 billion worth of products ranging from electric pianos and pachinko displays to printers and TV set-top boxes. Kinpo also makes hard disk drives, routers, and other devices that link to PCs, leaving the group exposed to the computer industry’s decline. Finding the next big innovation to manufacture and export is an urgent task for Shen. “We need to try something new,” he says. “Otherwise the current product line eventually will be gone.”
Kinpo’s path to something new is through XYZprinting, a company Shen founded three years ago. Building on Kinpo’s track record as an outsourcing manufacturer for such customers as HP and Konica Minolta, XYZprinting makes small, low-cost 3D printers for consumers and small businesses.
Selling 3D printers will be a viable business, Shen says. To make that day come sooner, XYZprinting sells such machines as the da Vinci Jr. 1.0w, a Wi-Fi-enabled 3D printer that can print as fine as 0.1 millimeters and retails for as little as $350 on Amazon.com. The low-cost strategy has established XYZprinting as the No. 1 brand for 3D printers of all sizes worldwide, by the number of machines sold. In the final quarter of 2015, XYZprinting had 31 percent of the global market in desktop 3D printers, according to data recently published by London-based research group Context. The company sold more than 50,000 of its low-cost printers in 2015, giving XYZ a 21 percent share, more than twice that of No. 2 brand 3D Systems. Shen, who expects his company’s total 3D printer revenue to reach about $50 million this year, projects sales will grow to $200 million to $300 million within three to five years.
Bigger names are getting into affordable 3D printing. Mattel in February announced plans to sell the ThingMaker, a 3D printing system designed with San Rafael, Calif.-based software company Autodesk that will enable families to design, create, and print their own toys. It’s available for pre-order on Amazon for $300. In January, Polaroid introduced its ModelSmart 250S 3D printer, produced through a partnership with Environmental Business Products, a London-based manufacturer.
XYZprinting may not have much name recognition, but it does have an advantage, because of Kinpo’s years of squeezing out profits in Taiwan’s notoriously thin-margin electronics industry. “They do very well in cost management,” says Wendy Mok, an analyst with IDC in Shenzhen. “They have the manufacturing background, they know the difficulty of R&D.”
Even so, the 3D printer consumer market “is still in the infancy stage,” says Simon Chan, an analyst in Hong Kong with Bloomberg Intelligence. Printing materials are expensive, he says, and consumers haven’t yet identified must-print products that would increase demand. “The user case is still not really decided,” says Chan. Stratasys, an Israeli-American company that is a major player in 3D printing, is focused mostly on the technology’s use in manufacturing. That’s also the case with most of Shen’s competitors. “We are not seeing a lot of demand” in the consumer market, says Stratasys Chief Business Officer Joshua Claman. Eventually there will be a market for desktop 3D printers, he says, but not before quality and reliability are improved. And inexpensive 3D printers are less versatile, Claman says—most “don’t handle multiple materials and don’t handle multiple colors.”
The biggest threat to Shen’s plans for XYZprinting is across the Taiwan Strait in mainland China. Taiwanese producers of PCs and computer components have lost ground to mainland-based competitors, and the 3D printing industry faces similar competition. There are hundreds of mainland companies making the printers, according to IDC’s Mok. Chinese companies “can learn very fast,” she says. For the most basic 3D printers, “we have seen a lot of Chinese vendors can really produce printers at a very good price.”
Shen says his team, with decades of printing know-how, will be able to stay ahead of its Chinese rivals. “If you don’t have a 2D background, it’s difficult to catch up,” he says. And he’s making sure to diversify the business, producing more expensive machines for industrial use and working with a local university to develop 3D printing of dental implants. XYZprinting is developing a system that can make cookies, chocolates, and other food on a 3D printer. “Eventually,” he says, “I think everything will be possible.”