Palliser Urges Ajinomoto to Hike AI Material Prices

Ajinomoto, best known for MSG, also produces ABF, a specialized insulating material crucial for advanced chip substrates that link chips to devices. Palliser, identified as one of Ajinomoto's top 25 shareholders, argues the company is significantly under-monetizing this critical AI component, noting ABF accounts for less than 0.1% of a graphic processing unit's sale price, making a price hike palatable for customers.

Traditional Japanese manufacturers, including Ajinomoto, historically prioritize stable customer relationships over aggressive price increases, often only raising prices during severe supply crunches or cost squeezes. However, demand for advanced AI chips is soaring, and industry forecasts predict a widening supply-demand gap for ABF substrates through 2028.

Ajinomoto is ramping up ABF capacity and plans additional expansions, but analysts like Jukan Choe of Citrini Research state the company will inevitably be forced to raise prices as demand outstrips supply. Ajinomoto's shares are up over 40% year-to-date following strong earnings and upbeat profit guidance.