Shares in the tiny company whose clients include GE Aviation , Boeing , Airbus and GKN Aerospace , surged 530 percent in the past year rocketing ahead of 3D printing giants 3D Systems and Stratasys .
3D printing is still in its infancy on most factory floors and in some industries where bulk production is required it may never be fully adopted but McKinsey estimates that it could have a huge economic impact by 2025, explaining why investors are so keen on the sector.
Arcam's machines print metal parts for the aerospace and implants industries where they make complicated pieces in smaller volumes, allowing companies to save on expensive metal such as titanium.
"There's a clear advantage to using it in aerospace...Because you can design different you can therefore lightweight something," said Richard Hague, a professor at Nottingham University and an expert in additive manufacturing.
"For aerospace if you can lightweight something then you can save fuel and make it a massive cost saver over the life-time of the aircraft."
3D printing technology has been around since the 1980's, and is mainly used for plastic modelling. However, there was a breakthrough in the industry last year when GE Aviation said its new LEAP jet engine would use 3D printed metal fuel nozzles.
U.S. President Barack Obama added to the hype, noting 3D printing, commonly known as additive manufacturing, had "the potential to revolutionize the way we make almost everything".
The McKinsey report from 2013 estimated that 3D printing could generate economic impact of $230 billion to $550 billion per year by 2025, mainly from consumer uses and manufacturing.
GE's oil and gas division told Reuters this week it will start pilot production of 3D printed metal fuel nozzles for its gas turbines in the second half of this year, a major step towards using the technology for mass-manufactured parts in the industry.
"Making one of something today we can do with additive technology. If you want 10,000 then you go back to some of the older manufacturing technologies," Eric Gebhardt, Chief Technology Officer at GE Oil and Gas.
"The printing is coming along right now, it's not exactly where we need it to be for some of the designs we're coming up with but it's definitely coming along very quickly."
SOMETHING FOR THE FUTURE
Most metal 3D printers use lasers as an energy source but Arcam uses powerful electron beams to melt thin layers of metal powder in a vacuum and build up strong metal parts such as hip implants and jet engine turbine blades.
Lasers are better when it comes to smaller parts with finer resolution, such as dental implants, while the EBM system wins for larger parts, such as orthopaedic implants.
Nevertheless, some industries say wide use of 3D printing is some way off including ABB the world's biggest supplier of industrial motors and drives.
"It's largely because we don't have components that are particularly weight-critical. Plus, we're very cost critical, so we have to find the most cost-effective way of producing any component and we tend to be high volume compared to, say, aerospace," said Bill Black ABB's head of quality and operational excellence.
"For ABB's range of products and as the technology is currently capable, we don't see it being used in manufacturing any time soon, but we continue to watch it and we continue to try it because we are sure that in the future it will be part of our landscape."
Car makers have been using additive manufacturing for prototyping for many years and analysts at Canaccord Genuity believe automotive in time will become an important market for Arcam. But with high production volumes and cheaper materials in the car industry, this is not likely to be around the corner.
"We may see pre-series and prototypes, but the cost pressure is completely different than in the industries where we are," Arcam CEO Magnus Rene said.
HIPS AND PLANES
With a market value of $790 million on annual sales of just $30 million, investors are nevertheless looking many years ahead for Arcam's success.
The value of the five listed 3D printer makers with industrial exposure -- Arcam, U.S. Exone and German Voxeljet , 3D Systems and Stratasys is far higher than predictions for the total market as far out as 2021.
They have a joint market value of $17 billion while Wohlers Associates sees the total 3D printing market at $10.8 billion in 2021, up from $2.2 billion in 2012.
Out of Arcam's 24 machine orders in 2012 two thirds came from aerospace, the world's top consumer of titanium. Investment bank Espirito Santo sees the aerospace market for 3D printing tripling to just short of $700 million from 2012 to 2016, according to a recent research note.
GE's Avio Aero, with whom Arcam has worked closely to develop titanium alloy turbine blades, had 10 of Arcam's EBM machines installed at the end of 2012 and has just built a new additive manufacturing facility in Italy which will hold up to 60 EBM and laser sintering systems.
Although not as important for the future as aerospace, the implant industry also offers potential for 3D printing companies, with over a million hip replacements a year.
Arcam customer Adler Ortho, an Italian maker of hip and knee implants, launched its first product made with EBM in 2006.
"We believe Arcam's revenue growth will be well above that of the 3D printing industry, driven by penetration of tier-one orthopaedic implant customers and a ramp to volume production by aerospace customers," Canaccord Genuity said.
Arcam sales shot up 73 percent to 133 million Swedish crowns in the first nine months of 2013. It logged a steady stream of printer orders in the fourth quarter, albeit just short of the record level in the final quarter of 2012.
As aerospace and medical companies churn out a growing number of designs calling for 3D printing, there are worries there will not be enough machines and materials to meet demand.
"For example GE Aviation...They may not have the machines, enough capacity in the world to build the parts they want to build," said Terry Wohlers, president of consultancy firm Wohlers Associates which has tracked the industry since the first steps in the 1980's.
Other aerospace groups including Rolls-Royce , Pratt & Whitney and GKN Aerospace are also investing in additive manufacturing.
GKN Aerospace, an Arcam customer, said several challenges need to be overcome before it is fully embraced including speeding up the printing and improving post-process finishing.
For Arcam with just 70 employees, adding capacity to match future market growth poses challenges. It raised 348 million crowns through a share issue in December to help it fund expansion and bought Canadian powder metal maker AP&C in a move to secure supply to meet growing client demand.
Speculation about industry consolidation is rampant.
"Is Arcam an acquisition target? Of course. Are many of the laser-based companies targets? They are as well," said Wohlers.
3D Systems added exposure to printing in metals with its acquisition of French Phenix Systems last year. Stratasys still lacks capabilities in metals and GE's 3D printing push has made some speculate it could one day make its own machines."Arcam would be a good fit everywhere and I can very well understand if sector companies are tempted," said Thomas Carlstrom, investment manager at Swedish state foundation Industrifonden, Arcam's largest owner with close to 16 percent of shares.