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FollowingAjinomoto: The leap from seasoning to key materials for AI chips
Japan's Ajinomoto Company (TYO: 2802), which has a history of 117 years, is not only famous for its MSG, but also produces thin films covering almost all advanced AI chips. The insulating layers. The company has raised product prices by about 30%, and raised its full-year results forecast due to a 127% increase in quarterly revenue.
How has Ajinomoto become a key part of AI technology?
Most people know Ajinomoto through the seasoning invented in 1909. Today, its product "Ajinomoto Build-up Film"(ABF) has become an important pillar of the AI hardware supply chain. ABF is a thin resin layer that provides electrical insulation to high-performance processor substrates. At present, Ajinomoto accounts for more than 95% of the ABF market, and the remaining 5% is occupied by Sekiyu Chemical. A single AI accelerator may require 8 to 16 layers of this film, which Nvidia, Intel and AMD all rely on to insulate the microscopic lines inside chip packages.
Ajinomoto revealed that ABF technology originates from its amino acid chemistry research and is homologous to the science behind MSG. The film was first adopted by semiconductor manufacturers in 1999 and has since been continuously improved to accommodate higher density CPUs. It is worth noting that according to Cryptopolitan, it is expected that by 2026, technology giants will invest more than US$670 billion in AI infrastructure.
The 30% price increase was confirmed in the May announcement and gradually implemented for customers. Previously, activist shareholder Palliser Capital had called in March 2026 for the increase to more than 30%. According to reports, the ABF supply and demand gap will be close to 10% in the second half of 2026, rise to 21% in 2027, and reach 42% in 2028. Ajinomoto has committed to investing more than 25 billion yen (about 150 million US dollars) and plans to increase production capacity by 50% by 2030, but a new factory in Japan is not expected to start production until around 2032. ABF shortages in 2020 and 2021 led to extended substrate delivery times and prices soared by as much as 40%.
As of mid-2026, the company's share price has risen about 65% during the year and currently closes at 5196 yen (US$32.93), near the top of the 52-week range (3270 yen to 6340 yen).
How will this price increase affect chipmakers and very large enterprises?
A 30% increase in ABF prices will not push up chip prices proportionately, because thin films are only one of many raw materials. Analysts estimate that the increase could increase substrate costs across the semiconductor industry by 3% to 6%. The cost will also affect foundries and packaging companies before it is passed on to the balance sheets of very large companies such as Microsoft, Google and Amazon. As new GPU and ASIC designs integrate more ABF into each chip, demand growth has even exceeded aggressive capacity expansion plans.
The materials business and ABF sales in the AI server and network sectors drove Ajinomoto's first-quarter revenue to a record high, and business profit increased by 127% year-on-year. As a result, Ajinomoto raised its consolidated forecast for the fiscal year ending March 2027, predicting sales of 1.732 trillion yen (US$10 billion) and business profit of 202 billion yen (US$1.2 billion). Electronic materials used in AI, servers and network boards contributed 9 billion yen (US$57 million) to sales outlook and 5 billion yen (US$31 million) to business profit. While forecasts for seasonings and frozen foods remained unchanged, profit for the quarter fell by 600 million yen due to rising costs and a slow recovery in North American product recalls. Ajinomoto expects tensions in the Middle East to bring additional annual costs of approximately 25 billion yen ($158 million).
