A century-old food company ventures into the AI industry, making a profit of 59.2 billion, with division revenue doubling, all thanks to discovering a superior insulating material from waste

Ajinomoto, known for producing monosodium glutamate, recently announced its third-quarter results for the fiscal year 2025, reporting a 15% year-on-year increase in profit and raising its full-year profit forecast. The stock price surged 13.3% on Friday, marking the largest single-day increase since November 2024. This well-known company benefited from strong sales of seasonings and coffee products, and it also capitalized on the AI wave, with key film materials used in AI servers and chips helping its "functional materials" business achieve a 28% revenue growth in the first three quarters of the fiscal year 2025, with expectations for the business's full-year revenue to reach 128%, significantly up from the previous estimate of 111%. Upgraded Profit Forecast for Fiscal Year 2025 Ajinomoto's profit for the last quarter reached 59.2 billion yen, a 15% increase compared to the same period last year; revenue was 425 billion yen, exceeding the market estimate of 420 billion yen. The company has also raised its full-year profit expectation from 180 billion yen to 181 billion yen. Citigroup analyst Hiroki Watanabe noted in a report that strong sales of coffee products and seasonings in Japan led to profits exceeding expectations, stating that Ajinomoto's "strong performance alleviated concerns about fundamentals," and added that he sees more potential for the company to repurchase shares. With Japanese Prime Minister Sanae Takaichi promising to temporarily reduce the food sales tax as part of her election campaign, Japanese food-related stocks like Ajinomoto have recently been boosted. The stock has risen over 20% year-to-date, outperforming the Tokyo Stock Exchange index. Expansion of Product Lines in the Monosodium Glutamate Kingdom Founded in 1909, Ajinomoto has a history of over 116 years. The company's founding was inspired by Professor Kikunae Ikeda of the University of Tokyo, who successfully extracted monosodium glutamate from a bowl of kelp soup and commercialized it as the seasoning "Ajinomoto," subsequently expanding its product line. In fact, Ajinomoto's business scope extends far beyond seasonings; in addition to its classic monosodium glutamate products, it also produces various processed foods. Since entering the coffee market in 1973, it has developed products ranging from instant coffee to coffee sticks. The company is also involved in healthcare and biopharmaceuticals, including the development of pharmaceutical raw materials and cell culture media using amino acids; providing manufacturing and development services to pharmaceutical companies, including pharmaceutical intermediates and active pharmaceutical ingredients. It also produces sports nutrition products. The Significance of "Functional Materials" However, one of the most strategically significant businesses is its "functional materials" division, which plays a crucial role in the global semiconductor industry. This business originated from a film material called "Ajinomoto Build-up Film" (ABF) developed by the company in the mid-1990s. ABF initially stemmed from Ajinomoto's research on how to utilize by-products generated during the seasoning production process—fermented yeast liquid. Researchers discovered a resin-like substance with excellent insulation properties from these "waste materials" and successfully developed it into a film material. However, the new product failed to penetrate the material supply system, as Ajinomoto's past reputation was as a food company, which hindered its credibility in the industry In 1999, Intel released the Pentium III 500MHz processor. As the demand for computer processing power increased, CPU manufacturing processes needed to become more precise. The traditional insulating ink technology could no longer meet the requirements, necessitating new insulating materials. They turned to Ajinomoto's ABF film, which successfully addressed the technical challenges of semiconductor packaging, allowing this food company to enter the semiconductor industry. ABF Materials Account for Over 95% of Global Market Share ABF film is an essential insulating material for producing high-efficiency semiconductor products, helping to ensure that electronic signals can be transmitted accurately. Currently, most high-performance processors, AI chips, server chips, and other semiconductor products worldwide require ABF film for packaging. Statistics indicate that Ajinomoto holds over 95% of the market share in ABF materials. With the explosive development of technologies such as artificial intelligence, high-performance computing, and 5G, the demand for ABF film is naturally on the rise. Ajinomoto's "Functional Materials Business" has also performed excellently, with revenue growth of 28% and profit growth of 30% in the first three quarters of the 2025 fiscal year. It is expected that this business segment will achieve a 28% sales growth for the entire 2025 fiscal year, significantly exceeding the original forecast of 11%. To meet the growing demand, Ajinomoto has completed a significant capacity expansion at its Gunma factory, establishing new production facilities as part of the first phase of capital investment to meet projected demand before 2030