A Tai­wanese tech com­pany’s bid for self-preser­va­tion turns it into a 3D-print­ing pi­o­neer

▶ Elec­tronic parts maker Kinpo has be­come a 3D print­ing pi­o­neer ▶ With­out “a 2D background, it’s dif­fi­cult to catch up”

Bloomberg Businessweek (North America) - - Con­tents -

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 Madein-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 main­land­based 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.” �Bruce Ein­horn

The bot­tom line Kinpo’s Xyzprint­ing is the No. 1 brand for 3D print­ers world­wide, with 31 per­cent of the global mar­ket.

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