The company best known for inventing MSG seasoning is now one of the most important bottlenecks in the global AI supply chain. Ajinomoto confirmed a roughly 30% price increase on its Ajinomoto Build-up Film, the insulation material that sits inside virtually every advanced AI chip package on the planet.
The hike, being rolled out on a client-by-client basis, reflects a supply shortage that analysts expect to persist well into 2027 and possibly beyond. With over 95% market share in ABF, Ajinomoto doesn’t really have competitors breathing down its neck. Sekisui Chemical holds the remaining sliver at around 5%.
A seasoning company running the AI supply chain
ABF is a thin resin film that acts as an insulating layer in the substrates of high-performance processors. Every advanced GPU, every AI accelerator, every high-end ASIC needs it.
Ajinomoto stumbled into this business through its amino acid chemistry expertise, the same science behind MSG. The company parlayed that knowledge into semiconductor materials decades ago, and its dominance has only grown as AI chips have gotten more complex.
The supply gap keeps widening
The 30% price increase didn’t come out of nowhere. Palliser Capital, an activist shareholder, publicly pushed for a hike of more than 30% back in March 2026. Ajinomoto’s May announcement landed right in that range, suggesting the pressure campaign worked.
Forecasts suggest a supply-demand gap of about 10% in the second half of 2026. That gap is projected to widen to 21% in 2027, then balloon to 42% by 2028.
Ajinomoto has pledged more than ¥25 billion, roughly $150 million, to expand production capacity by 50% by 2030. A new plant in Japan is part of the plan, though it isn’t expected to come online until around 2032.
This isn’t the first time ABF has been in short supply. During 2020 and 2021, shortages led to dramatic increases in substrate lead times and price surges of up to 40%.
What it means for chip costs and the broader market
A 30% increase in ABF prices doesn’t translate into a 30% increase in chip prices. ABF is one component among many. But analysts estimate the hike could push substrate costs up by 3-6% across the semiconductor industry.
That’s meaningful when you consider the volumes involved. Nvidia, AMD, Intel, and every major AI chip designer depend on substrates that use ABF. The cost increase flows through foundries and packaging houses before landing on the balance sheets of hyperscalers like Microsoft, Google, and Amazon.
For Ajinomoto itself, the market has responded with enthusiasm. The company’s stock has risen 65% year-to-date as of mid-2026, far outpacing broader market benchmarks.
Ajinomoto’s expansion plans are real, but the gap between when the shortage peaks and when new capacity arrives is measured in years, not quarters. The structural shift toward more complex AI GPU and ASIC substrates, which require more ABF per chip, means demand is growing faster than even aggressive capacity buildouts can match.