Velo3D and Ohio Ordnance Works Pioneering 3D-Printed Military Components: A Strategic Shift in Defense Manufacturing

The defense industry is undergoing a quiet revolution, and Velo3D (NASDAQ: VLD) has just taken a pivotal step to lead it. The company’s partnership with Ohio Ordnance Works (OOW) to develop 3D-printed military weapon components marks a bold move to accelerate the adoption of additive manufacturing (AM) in critical national security applications. This collaboration could redefine how the U.S. military produces high-performance parts, reducing costs, shortening timelines, and unlocking design possibilities once deemed impossible.

A Strategic Play for Defense Modernization

The agreement, announced in May 2025, positions Velo3D as a key enabler of OOW’s Rapid Production Services (RPS) initiative. By applying its expertise in design optimization, material selection, and quality assurance, Velo3D is helping OOW streamline the development of military-grade components. The partnership’s focus on design for additive manufacturing (DfAM) is critical: it ensures parts are not only functional but also optimized for scalable, repeatable production using Velo3D’s proprietary Sapphire printers and Flow software.

The stakes are high. Defense contractors face pressure to modernize supply chains, reduce reliance on legacy manufacturing, and deliver complex systems faster. AM’s ability to produce intricate geometries with fewer assembly steps—such as conformal cooling channels or lattice structures—could cut production costs by up to 40% compared to traditional methods, according to industry estimates. For OOW, this means faster iteration cycles and the potential to meet urgent military procurement deadlines.

Technical Strengths Underpin the Deal

Velo3D’s vertically integrated AM ecosystem is central to the partnership. Its Flow software simulates print processes to preempt defects, while the Sapphire printer’s precision ensures consistency across materials like titanium and Inconel. The Assure quality control system adds another layer of reliability, enabling OOW to scale production with confidence. These tools address longstanding AM challenges, such as variability in part performance, which have historically limited adoption in high-stakes sectors like defense.

The collaboration also benefits from Velo3D’s growing defense focus. Recent hires, including Retired Navy Rear Admiral Jason Lloyd (board member) and Brice Cooper (VP of government relations), signal a strategic pivot to align with Pentagon priorities. As the Pentagon aims to double its spending on AM by 2030, Velo3D is well-positioned to capitalize on this shift.

Market Context and Investment Implications

The defense AM market is projected to grow at a CAGR of 14% through 2030, driven by initiatives like the U.S. Department of Defense’s Advanced Manufacturing National Program Office. Velo3D’s role in OOW’s RPS initiative could establish it as a go-to partner for similar projects. Notably, the company’s existing relationships with aerospace giants like Lockheed Martin (LMT) and SpaceX provide a foundation for cross-industry synergies.

Investors should also note Velo3D’s margin expansion potential. As it scales services like application engineering and material analysis—higher-margin activities compared to hardware sales—the company’s gross profit could improve. In Q1 2024, VLD reported a 14% sequential increase in services revenue, a trend likely to accelerate with this partnership.

Risks and Considerations

The partnership’s success hinges on regulatory and technical hurdles. Military-grade components require rigorous testing to meet standards like MIL-STD-810, and AM’s traceability remains a challenge. Velo3D’s Assure system addresses some of these concerns, but delays in certification could impact timelines. Additionally, competition from established players like Stratasys (SSYS) and 3D Systems (DDD) may pressure margins.

Conclusion: A Strategic Bet on Defense Innovation

The Velo3D-OOW deal is more than a supplier agreement—it’s a blueprint for how AM will transform defense manufacturing. By embedding its technology into OOW’s RPS, Velo3D is securing a foothold in a sector poised for growth. With a market cap of ~$1.2B and a revenue CAGR of 28% over the past five years, the company’s fundamentals align with its ambitions.

Consider these data points:
- The global defense AM market is expected to reach $2.1B by 2030, per MarketsandMarkets.
- Velo3D’s gross margin improved to 49% in 2023, up from 42% in 2020, signaling operational efficiency.
- The Pentagon’s 2024 budget allocated $1.1B to AM initiatives, a 17% increase from 2023.

For investors, Velo3D represents a leveraged play on defense innovation. While risks exist, the strategic alignment with OOW and the broader AM trend in defense suggest this partnership could be a catalyst for sustained growth. In a sector where speed and precision matter most, Velo3D is proving it can deliver both.