Ajinomoto, the maker and inventor of the food seasoning monosodium glutamate (MSG), has seen its profits soar during the covid-19 pandemic. But that’s not necessarily because people are buying up MSG stocks to add it to soups, stir-fries and other lockdown comfort foods.
Instead, the company’s rapid growth has been fueled by the manufacture of a niche but powerful material called ABF (short for Aj)inomoto laminated film substrate. The ABF isolates the central processing unit (CPU) that powers computer functions.
More than 90 percent of PCs’ processors are insulated with ABF—crazy, unexpected diversification for a company that started selling the umami-filled condiment in Japan 113 years ago.
ABF is more important than MSG for Ajinomoto at the moment
With the demand for computers Soaring during the epidemic, as did earnings from Ajinomoto’s “Functional Materials” division, which includes its ABF business. (The division also produces activated carbon, special processed paper, and other components produced for the manufacturer. )
For the fiscal year ended March 31, Ajinomoto’s earnings (pdf) Sales from its Functional Materials division rose 53% from the previous year to 28.9 billion yen. Meanwhile, profit at Ajinomoto’s sauces and seasonings division was largely flat as higher raw material and fuel costs held back revenue growth.
Overall, functional materials accounted for 23% of Ajinomoto’s fiscal 2021 profit, up from 16.7% the year before.
Naturally, investors saw an appetite for Ajinomoto’s key ingredient. Shares of Ajinomoto are up about 10% since the start of the year.
More than two decades after the discovery of ABF, the pandemic has cemented Ajinomoto’s status as an important link in the large semiconductor supply chain.
How did Ajinomoto start making computer materials?
In a sense, the business of flavors and ingredients is really the business of chemicals.And just in the process of making MSG Overlaps with the process of producing ABF.
To make MSG, sugar is fermented into glutamic acid crystals, which are then combined with sodium to make the popular umami seasoning. A byproduct of this process is chlorinated paraffins, which are formed when sodium is chemically extracted from salt. When chlorinated paraffins are combined with epoxy resin curing agents, the chemicals used to make adhesives, it helps create materials with high insulating properties.
Ajinomoto has a functional materials department (pdf) Making materials such as adhesives and flame retardants for manufacturers since 1942. In the 1990s, as computer sales were on the rise, Ajinomoto saw an opportunity when an electronics company asked it to provide a film-like insulator for circuit boards. General Manager Eiko Oshimura said.
Previously, a special ink was used to insulate the chip, but the liquid took time to dry. Thin films could speed up production, just in time for a surge in demand for high-speed chips — and the insulating material needed to prevent short circuits from forming. After several development iterations, Ajinomoto stumbled upon ABF in 1999.
More than two decades later, during the covid-19 pandemic, PC sales soar As the ranks of remote workers proliferate around the world. Meanwhile, sales of Ajinomoto Functional Materials rose from 45.1 billion yen ($327 million) in 2020 to 60.5 billion yen ($439 million) in 2021. Ajinomoto’s Fine-Techno Corporation subsidiary.
Like other industries, the semiconductor industry, which makes processors for computers, is affected by boom and bust cycle. Between 2008 and 2013, ABF’s sales declined due to the financial crisis and the rise of smartphones. (Smartphone chips are not insulated by ABF.)
But Ajinomoto is betting that demand for ABF will continue despite pc sales It is declining compared to 2020-21 levels. “Artificial intelligence and big data are a trend,” said Ohashi, “and [they] Use high performance computing. ”
Ohashi also pointed to the expansion of 5G mobile data, which will pave the way for more data centers — buildings full of processors that need to be insulated.Ajinomoto expects its ABF shipments Will grow 18% per year (pdf) 2020-2025.
How Ajinomoto Can Keep Up With Innovation
Because of Ajinomoto’s dominance in this insulation segment, the company has been eyeing other companies supplying chemicals to electronics makers, Oshimura said. For example, AT&S, S supplier or circuit board substrate Intel, investment US$2 billion new substrate production plant in Malaysiawill begin operations in 2024.
“This is a very rapidly changing area of technology,” Oshimura said. The research team moved through development and prototyping very quickly, as customers demanded higher processing speeds every few years and needed to upgrade the ABF material to match that performance.
Ohashi said that if ABF doesn’t do the work when quantum computing finally hits the commercial mainstream, Ajinomoto will also have to develop the right materials for the machines.
The insulating substrate market is expected to grow from $4.5 billion to $6.5 billion By 2028, therefore Market research firm Absolute Reports. Overall, Ajinomoto’s food business is larger — accounting for 58% of the company’s 2021 sales — but Ajinomoto plans to continue growing its non-food business.
“One key is communication with customers,” Ohashi said. “once [a] The client says, ‘I want this’, we need to prepare [so] we have this. “