In the following video, 3D printing specialist Steve Heller and industrials analyst Blake Bos discuss the strengths and weaknesses of Arcam's (NASDAQOTH:AMAVF) electron beam melting, or EBM, metal 3D printing technology.
Similar to the more popular direct metal laser sintering, or DMLS, EBM also builds metal objects layer by layer, but instead of using a laser to selectively melt metal powder together to form an object, it uses a powerful electron beam housed inside a vacuum chamber. Unlike DMLS, EBM doesn't rely on a series of mirrors, which have mechanical limitations in terms of speed, to direct the beam; it instead uses a series of electromagnetic coils, resulting in significantly faster build times than DMLS.
One of EBM's drawbacks is that the build chamber operates at a blistering 700 degrees Celsius, which partially sinters excess build material to the 3D-printed object. Although this allows an EBM-printed part to not have support structures, it comes at the expense of resolution, and highly intricate designs aren't well suited for EBM technology.
Going forward, Arcam investors should monitor the development of EBM to determine whether the company can improve its resolution to be more competitive against DMLS, which has received a huge endorsement from General Electric to 3D-print jet engine fuel nozzles for its upcoming Leap jet engine.
A full transcript follows the video.
Blake Bos: Arcam's a very sexy company. They have that technology, Steve, electron beam melting, and it's really cool. We learned a lot about their printers this visit from them and competitors, got a lot of great information, so I kind of wanted to go over the company, maybe introduce EBM to folks that aren't sure of it.
Steve Heller: Yeah, so the prevailing technology in metal 3D printing right now is direct metal laser sintering, so it involves a laser melting metal powder layer by layer. EBM, or electron beam melting, very similar, except it uses an electron beam and what that allows is it allows the beam, since it's using electromagnets to actually...
Blake: Not a mirror.
Steve: Right, it doesn't use a mirror, so DMLS, or direct metal laser sintering, uses a mirror to move the laser around.
Blake: A mechanical object.
Steve: So there's mechanical limitations to how fast you can operate that. Electron beam melting, since it uses electromagnetism to actually direct the electron beam, it can literally shoot the beam in 50 directions at once, and basically you could be printing 50 things at one time, so it's incredibly faster.
The drawback of it is, one advantage is that it doesn't have any support structures, but that comes at the cost of the build chamber being very hot, 700 degrees Celsius. So what does that mean? That means that the part is basically melted to the outer exterior.
Blake: So it's like it builds the part inside like this clump of hard sand, basically.
Steve: You have to, like, pick it away with like an ax. It's not easy to get that part out of there.
Blake: And so what's that do, because they didn't use it for the Leap fuel engine nozzle, and if you have these intricate internal passageways, it doesn't seem like, from the people we talked to, you can't use it for that?
Steve: Right, because it, kind of like, the support structures, it doesn't use any; it just kind of condenses everything. Since it's so hot everything's kind of a little bit melted anyway.
Blake: So if there's a little tunnel-like tube through the part you can't get the powders out.
Blake: So you can't make those parts.
Steve: It kind of, like, gunks up a little bit.
Blake: So you can't make really intricate parts like you could on a laser sintering machine.
Steve: Right, so its advantage is speed. It's probably -- it's great since its surface finish is a little bit rough, titanium implants, medical applications, it's like perfect for that. It's actually a very sensitive machine, too, so I've heard a few stories, someone walking by with a ladder literally throwing the machine off the print, a bus driving...
Blake: Yeah, because it uses magnetism.
Steve: Yeah, it's very sensitive, so if you're on a factory floor it's probably not the right machine for you.
Blake: Yeah, so I think investors, like for me personally in Arcam, is like this technology is still very early in its development stage. The big pro is that speed, but as far as somebody like GE or Airbus need it for a really complex part -- not going to happen.
Steve: Right, just the nature of the technology being a very hot build chamber and everything's partially melted to begin with.
Blake: You just can't get the complexity.
Steve: They can't get the complexity because it's a little bit sloppy.
Blake: Yeah, and so maybe long-term they can figure that out possibly, but...
Steve: Yeah, hopefully. I mean, it's a gamble.
Blake: It's definitely a risky investment at today's prices. That's kind of my takeaway, and I'm going to sit this one out.
Steve: Yeah, I mean, the expectations are such that they're going to be able to work out these challenges, basically.
Blake: I just know, like, the expectations in the market are probably too high. They probably think they're going to work them out in the next two years.
Steve: Right, it's probably -- the valuation suggests that and whether or not they can deliver, I think it's going to take probably two generations minimum for them to really get it together. Sure, they can increase speed all they want by moving the magnets and improving the algorithm there, but actually producing fundamentally better parts as a result of an improved resolution, they may have to change the way they approach the technology, and I don't know if that's actually possible with electron beam melting.
Blake: There's a lot of development that needs to be done in comparison to laser sintering, which has had a lot of development so far.
Blake: A lot of dollars have been thrown at that.
Steve: And here's a great example, I mean, GE is going with direct metal laser sintering for a reason, and they're really leading the industry forward, so that tells you something right there as an investor. Who's the leader in manufacturing going with? Direct metal laser sintering, so Arcam is not in that picture right now.
Blake: Yeah, all right. Well, thanks, Steve. That's our takeaway on Arcam. We're a little indecisive on it. It doesn't look like it has a huge opportunity as maybe we would have previously thought.
Blake: All right, well, thanks for watching, Fools. Fool on!
Blake Bos owns shares of Apple. Steve Heller owns shares of Apple and Arcam. The Motley Fool recommends Apple and owns shares of Apple and General Electric. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.