Ajinomoto Holds Key Technology for the AI Industry, How Is That Possible?
Jakarta, CNBC Indonesia - The Japanese company Ajinomoto, known as a producer of MSG, is now in the spotlight from global investors. Not for its food business, but for its role in the artificial intelligence (AI) industry supply chain.
Citing The Wall Street Journal, a British activist investor, Palliser Capital, revealed that it has accumulated shares in Ajinomoto. They assess that the company holds a near-monopoly position over materials essential for AI infrastructure, yet has not maximised its profit potential.
Besides Ajinomoto, Palliser is also targeting other Japanese companies like Toto, known for its toilet products, but which also produces special ceramic materials for advanced chips. Both companies are deemed “overlooked” and undervalued amid the AI boom.
Ajinomoto itself built its business from the discovery of umami flavour, which was commercialised in the form of monosodium glutamate (MSG). However, behind that, the company has a functional materials business line that is now key in the semiconductor industry.
The product in question is Ajinomoto Build-up Film (ABF), a special insulating material used to make substrates, or important layers that connect chips to electronic devices via thousands of signals.
Without ABF, many of the world’s most advanced chips could not be produced.
Given this strategic position, Palliser assesses that Ajinomoto should be able to significantly raise prices. In fact, they are pushing for a more than 30% increase in ABF prices.
According to Palliser, this step would not overly burden customers because ABF’s contribution to the selling price of chips, such as GPUs, is very small, less than 0.1%.
However, Ajinomoto is opting for a more cautious approach. The company states that it continues to consider investor input, but focuses on sustainable long-term growth.
“We continue to develop our business by creating value together with customers,” the company stated, quoted from The Wall Street Journal, Saturday (11/4/2026).
Several analysts view this stance as related to efforts to maintain long-term relationships with customers. A price increase amid relatively stable supply risks damaging trust.
A researcher from the Taiwan Institute of Economic Research, Shih Fang Chiu, said that ABF prices remain stable because there has not yet been significant scarcity.
Nevertheless, the situation could change. Demand for increasingly large and complex AI chips is driving a sharp surge in substrate needs.
Ajinomoto’s dominance in the ABF market also gives it significant influence in the global semiconductor supply chain. Only a handful of companies are capable of processing this material into the ultra-dense substrates needed by tech giants like Apple and Nvidia.
On the other hand, other Japanese companies are becoming more aggressive. Nittobo, for instance, has raised prices for key AI materials due to surging costs and supply limitations.
Ajinomoto itself has begun increasing ABF production capacity and plans further expansion to meet the surge in demand.
Industry projections show that the gap between substrate supply and demand will widen until 2028. In fact, several producers state that current AI-related production capacity is nearly full and is projected to be unable to meet demand in 2027.
An analyst from Citrini Research, Jukan Choe, assesses that Ajinomoto ultimately has little choice but to raise prices.
“Ajinomoto needs to balance its reputation as a stable long-term supplier with the reality that ABF demand is growing far faster than supply,” he said.