A single, perhaps unexpected, company is now at the center of the AI hardware supply chain: Japanese seasoning giant Ajinomoto.
It turns out that Ajinomoto is the near-monopolistic supplier of a critical material called Ajinomoto Build-up Film (ABF). This film is an essential insulating layer used in the package substrates for high-performance processors like NVIDIA's GPUs. With a market share reported to be over 95%, Ajinomoto effectively holds a choke point on the entire AI industry. This situation has come to light as other bottlenecks have started to ease.
Let's trace the causal chain. First, back in 2023, TSMC identified CoWoS advanced packaging as the primary bottleneck limiting GPU production. In response, the industry invested heavily, with CoWoS capacity projected to grow by over 150% in 2024 and another 70% in 2025. This rapid expansion, however, shifted the pressure downstream to the materials needed to make the packages themselves.
Second, the demand for these materials, especially ABF, skyrocketed. Newer chips like NVIDIA's Blackwell GPUs use more High-Bandwidth Memory (HBM), which requires larger and more complex substrates, consuming more ABF film per chip. The problem is that ABF production capacity isn't growing nearly as fast. Ajinomoto's own plans call for a roughly 50% increase in output by 2030, a much slower pace than the explosive growth in packaging capacity.
Finally, this mismatch between soaring demand and slow-growing supply has made ABF the new binding constraint. The market is taking notice. Activist investors are now pressuring Ajinomoto to raise ABF prices, recognizing the immense pricing power it holds. This means the inflation we see in AI systems isn't just about the chips or the packaging anymore; it's also being driven by a fundamental material at the very bottom of the supply stack. The entire AI ecosystem is feeling the ripple effects, from longer lead times to higher costs.
- ABF (Ajinomoto Build-up Film): A highly specialized insulating film used in the substrates of advanced semiconductor packages, critical for connecting the chip to the circuit board.
- CoWoS (Chip-on-Wafer-on-Substrate): An advanced packaging technology developed by TSMC that stacks multiple chips together to improve performance and efficiency, heavily used for AI accelerators.
- Substrate: The base layer upon which a semiconductor chip is mounted. It provides the electrical connections between the chip and the rest of the system.