Japan's Ajinomoto said it can meet demand through 2030 for ABF, a core material used in artificial intelligence semiconductor packaging.

An online outlet, Gigazine, reported on June 15 that Ajinomoto is prioritising capacity expansion over price increases and is also securing its next production base.

ABF is an interlayer insulating material that insulates between copper wiring layers in package substrates that connect semiconductor chips and printed circuit boards. Ajinomoto is better known as a food company, but has established itself as a major supplier of the material. As demand for AI chips surges, procurement capabilities for package substrates and materials, as well as the chips themselves, have emerged as key variables in the semiconductor supply chain.

Ajinomoto CEO Shigeo Nakamura (시게오 나카무라), who participated in ABF development in the 1990s, said the company's current outlook suggests it can respond to demand until 2030. He added that uncertainty could grow after 2030 if AI-related demand rises faster than expected.

Ajinomoto drew a line against simple price increases that leverage its market dominance. Nakamura said ABF does not use copper foil or glass fibre and is therefore relatively less affected by rising raw material costs than other substrate materials. He said raising ABF prices simply because other materials are getting more expensive could harm customer relationships.

In the semiconductor industry, prices for some substrate materials are already rising. Copper foil and glass fibre companies raised prices citing higher energy prices and raw material costs. In this situation, some investors called for Ajinomoto to raise ABF prices on the back of the AI boom, but the company says it will respond by expanding capacity.

The company has secured a site for its next production facility in central Japan and is targeting 2032 for the new plant to begin operating. Nakamura said it could also bring the schedule forward depending on customer demand. As a result, the ABF supply strategy is expected to focus on the pace of capacity expansion rather than pricing.

Prices are not completely fixed. Prices for some organic solvents used by Ajinomoto are rising, and suppliers may seek to pass on additional costs. Tensions in the Middle East have not directly hit raw material supplies so far, but risks of shortages in resin feedstocks and chemical fillers remain. "At this point, we have not confirmed any direct impact," Nakamura said. "Diversifying procurement sources is serving as a buffer," he said.

Technological change is also a variable. As advanced chips become more sophisticated, package substrates themselves are becoming more complex and more expensive. Nakamura said ABF prices could rise if the trend toward higher added value continues, but warned that raising prices too much could spur development of technologies that avoid using ABF.

The potential for substitute materials remains limited. Some forecasts say glass could replace ABF, but analyst Ming-Chi Kuo said that even if glass is introduced into chip packaging by 2028, it is likely to be used alongside ABF rather than completely displacing it. With no material in sight that can immediately replace high-performance ABF, securing supply capacity has become more important.

Against this backdrop, Ajinomoto sees the real bottleneck going forward as potentially being substrate production capacity rather than material prices. Nakamura said adoption of high-performance processors has begun in 'physical AI' such as robots and that AI has already become part of daily life. As a result, whether semiconductor substrate production can keep pace with growing AI demand has remained a key task for the industry.