Zhongcheng Securities released a research report stating that titanium alloys have a series of advantages such as high strength, high thermal strength, and good corrosion resistance. Currently, many 3C companies have begun to use titanium alloy materials and attempt to produce titanium alloy components through 3D printing. However, the high cost of 3D printing is still a major hindrance to penetration. Powder utilization rate and 3D printing equipment prices are the most critical factors for reducing costs and accelerating penetration of 3D printing in the future. In addition, yield and print efficiency also have a significant impact on decreasing 3D printing costs. Based on future demand in the 3C industry and the penetration of titanium alloys in the 3C industry, the titanium alloy 3D printing equipment market in the 3C industry is expected to reach 1.461 billion yuan/4.292 billion yuan/7.248 billion yuan in 2024-2026, with a market growth of nearly five times in three years.

China Great Wall's main points are as follows:

Current Industry Situation: Titanium alloys have superior properties and have become a new choice of material for 3C consumer terminals.

Titanium alloys have the advantages of high strength, high thermal strength, good corrosion resistance, good low temperature performance, large chemical activity, small thermal conductivity, and small elastic modulus, and many 3C companies have begun to use titanium alloy materials and attempt to produce titanium alloy components through 3D printing. For example, 1) Glory: The Magic V2, released in July 2023, is the world's first folding flagship machine to use a titanium alloy hinge, and the axle cover part of the hinge uses titanium alloy 3D printing technology for the first time; 2) Apple: Some titanium metal structural parts of the Apple Watch launched in 2023 adopt 3D printing technology. Moreover, as more and more 3C enterprises attach importance to ESG, 3D printing can reduce resource and energy consumption, which conforms to ESG concepts and is expected to accelerate the use of 3D printing.

Cost breakdown: Assuming certain critical parameters such as yield rate, the total expected cost of 3D printing a watch case (90% yield rate)/phone frame (70% yield rate)/phone axle cover (90% yield rate) is 131/369/95 yuan per unit.

Based on publicly available industry data and certain assumptions about critical parameters, Zhongcheng Securities estimates that: 1) Apple watch case: Assuming the 3D printing of the watch case has a yield rate and powder utilization rate of 90% and 75%, respectively, with powder costs of 0.6 yuan/g and 8 laser devices costing 7.5 million yuan, the total cost of a single watch case is 130.58 yuan. From a cost perspective, the cost of the 3D printed case is already competitive compared to the original non-3D printed case. 2) Apple phone frame: Assuming that the yield rate of the frame by 3D printing can reach 70% and powder utilization rate is 75%, with powder costs of 0.6 yuan/g and 8 laser devices costing 7.5 million yuan, the total cost of a single frame is 369.25 yuan. However, if the initial yield rate is only 20%, the corresponding total production cost would be 828.87 yuan. 3) Glory phone axle cover: Assuming a yield and powder utilization rate of 90% for the axle cover, with powder costs of 0.6 yuan/g and 4 laser devices costing 2.5 million yuan, the total cost of a single axle cover is 95.14 yuan.

"Powder utilization rate + 3D printing equipment prices" is the most significant factor for lowering the cost of 3D printing.

Zhongcheng Securities stated that the high cost of 3D printing is a major hindrance to penetration. Through sensitivity analysis, it was found that powder utilization rate and 3D printing equipment prices are the most critical factors for reducing costs and accelerating penetration of 3D printing in the future. In addition, yield and print efficiency also have a significant impact on decreasing 3D printing costs. In the future, with the development of 3D printing equipment production technology, optimization of management, and improvement of automation, 3D printing equipment is expected to decrease in cost, while powder utilization rate, printing yield rate, and print efficiency are expected to improve, thereby promoting a decrease in 3D printing costs and accelerating the penetration of 3D printing.

Scale estimation: Starting in 2024, a period of penetration and large-scale growth is expected, with the market growing by multiples in three years until 2026.

Based on future demand in the 3C industry and the penetration of titanium alloys in the 3C industry, the titanium alloy 3D printing equipment market in the 3C industry is expected to reach 1.461 billion yuan/4.292 billion yuan/7.248 billion yuan in 2024-2026, with a market growth of nearly five times in three years. The gross product market is expected to reach 1.145 billion yuan/5.432 billion yuan/9.485 billion yuan in 2024-2026, with a growth of more than 8 times in three years. In addition, the penetration rate of the corresponding iPhone in 2026 is only 14%, leaving ample room for development.

Investment Suggestions: At present, there are few competitors in the 3D printing equipment market, mainly dominated by Platinum Technology and Huashuogaoke. We continue to be bullish on the broad market space brought by 3D printing in the 3C field and recommend focusing on the core targets of 3D printing equipment, Platinum Technology (688333.SH) and Huashuogaoke (688433.SH), and the core targets of post-processing of 3D printing products, Jin Taiyang(300606.SZ).

Risk Warning: macroeconomic volatility risk, slower than expected progress in the 3d printing import into the 3c industry process risk, technology iteration risk, lower than expected demand for 3c titanium alloy products risk, upstream raw material price volatility risk, risk of inconsistent calculation data and actual situation.