JW Insights (集微網) reported on August 12 that Ajinomoto had notified customers in mainland China of a 30% reduction in ABF supply volume. The article cites "the latest supply chain information" as its basis, but does not specify the target period, contract terms, product grades, or volumes by customer, nor does it include any named comments from Ajinomoto or its customers. In its briefing materials dated June 30, Ajinomoto stated that it had no concerns about the supply system across the entire supply chain.
The two are not immediately contradictory. Even if there is spare capacity in overall production, inventory, and outsourced processes, shipment allocation by region, customer, and product type can still change. Whether such a change actually occurred has not been confirmed, but since ABF is a product for which Ajinomoto states it has maintained a market share of over 95% since its launch, tracking the "30%" figure alone tells us little about the impact. What matters for the ripple effect on production is where, and which grade, is being allocated.
The Target of the "30%" Figure Has Not Been Disclosed
The 30% figure in the JW Insights report was presented as the rate of reduction in supply volume to mainland China. It does not mean that China's ABF demand, global supply, Ajinomoto's sales, or its production capacity each fell by 30%. Nor is it clear whether the reduction concerns new orders or the shipment timing of existing contracts.
Ajinomoto's June 30 materials stated that ABF had been performing well since the start of FY26, and that there were no concerns about the supply system across the entire supply chain. However, the same materials did not disclose shipment volumes to China or allocation by customer. The overall outlook and region-specific cuts are separate propositions, and confirming today's report would require either a response from Ajinomoto or verification from the customers concerned.
| Claim | Currently Confirmed Status | What Remains Unknown |
|---|---|---|
| 30% reduction in supply to mainland China | Reported by JW Insights on August 12 | Target period, product type, customers, reason |
| ABF market share exceeds 95% | Stated by Ajinomoto in its June 30 materials | Sales volume to China and allocation by customer |
| No concerns about the supply system | Stated by Ajinomoto in the same materials | Whether regional allocation will be maintained |
| Impact on production in China | Unconfirmed | Customer inventory, delivery schedules, qualification status of substitute materials |
Even with the same 30% figure, the impact differs depending on whether new orders are being curtailed or shipments under existing contracts are being reduced. If only certain high-performance grades are affected, substitution could become more difficult than the quantity ratio alone would suggest. Conversely, if customers hold inventory, the ripple effect on production would be delayed. At present, there is no basis for determining which of these scenarios applies.
This is not yet a stage that can be discussed in terms of "supply cutoff" or sanctions. The report does not state a reason for the reduction, nor is there any basis for linking it to a 30% decline in China's AI chip production.
AI Substrates Are Growing from Roughly 70mm Square to Roughly 100mm Square
ABF (Ajinomoto Build-up Film) is an insulating film used between layers in package substrates for logic ICs. According to Ajinomoto, it is used in CPUs, GPUs, and ASICs for PCs, networking/servers, AI, and gaming applications. Because vias can be opened with a laser and copper can be directly plated onto the surface, it connects nanometer-scale chip terminals to millimeter-scale substrate terminals through multilayer fine wiring.
When considering demand for AI applications, the amount of material used is not determined by chip count alone. According to Ajinomoto's diagram, package substrates were around 70mm square with about 9 layers on each side (front and back) around 2023; by 2026, they are projected to reach about 100mm square with about 11 layers on each side. The company also presents a forecast that from 2031 onward, substrates will reach about 120mm square with about 13 layers on each side. While the total layer count cannot be determined definitively from the diagram, if both the area and the number of layers on both sides increase, the amount of material used per package tends to increase as well.
The gap from the starting point is even larger. The same diagram, showing the product at its 1999 launch, indicates that PC-oriented substrates had about 3 ABF layers on each side. By the 2026 illustration, this has grown to about 11 layers per side, with the substrate's side length extending to about 100mm. For AI applications, ABF is used in CPU, GPU, and ASIC packages, and the increase in substrate area and layer count per unit pushes up material demand.
ABF is a thermosetting film combining epoxy resin, curing agent, and inorganic fine-particle filler. In addition to fine via processing, the film must also satisfy properties required in post-lamination processes. As packages grow larger and wiring layers increase, the work of confirming both processability and reliability simultaneously becomes heavier when reselecting materials.
ABF is not the substrate itself. The interlayer insulating material supplied by Ajinomoto is processed by substrate manufacturers into package substrates such as FC-BGA. Whether supply becomes tight must be judged not only by the production volume of the film alone, but also by including the subsequent processing steps.
The Over-95% Market Share Is Supported by Qualified Processes
Ajinomoto states that it has maintained a market share of over 95% since launching ABF in 1999. This figure comes from the company's own account rather than third-party market research, but what matters is that the company customizes materials for each customer, coordinating performance and price from the early stages of development. Switching to a different film is not simply a matter of whether the chemical composition is similar.
Substrate manufacturers adapt lamination, laser processing, and copper wiring to their own processes. They also evaluate reliability, including warpage and moisture resistance. Ajinomoto cites its equipment for replicating these processes as a competitive strength, and obtaining certification equivalent to existing materials requires passing through these very processes.
Ajinomoto's development equipment traces the customer's process all the way through: embedding material via vacuum lamination, opening vias with a CO2 laser, forming wiring through exposure, and measuring reliability and substrate warpage. Even if a formulation works in the lab, it cannot move to adoption unless it produces the same processing results under the customer's equipment conditions and keeps variation in mass-produced products within limits. The reason a new film cannot easily be substituted in equal volume over a short period lies in the fact that the material formulation and manufacturing process are certified as an integrated whole.
The Functional Materials business, which includes ABF, saw sales rise to 125% of the previous year in FY25, with an operating margin above 50%. However, this is not the sales or margin figure for ABF alone. The number reflects the profitability of a materials business that has expanded its share of high-value-added products. The reason substrate manufacturers cannot easily switch materials or suppliers they have already adopted in a short period lies in the customer-specific joint development and process certification involved.
There are also moves toward material development on the Chinese side. Materials submitted to the Shanghai Stock Exchange by Huazheng New Material (华正新材) list CBF laminate insulating film as a product for advanced packaging applications such as computing chips, VCM, and PMIC. However, what the company presents as its strategy for 2026 is to focus on raising performance and continuing improvements. Mass-production qualification, yield, and sustained supply capability cannot be confirmed from this material alone.
A Supply Network Spanning In-House Production and Outsourced Processes
Ajinomoto produces the varnish that serves as the raw material for ABF in-house, while outsourcing film coating and cutting, warehousing, and shipping. Supply capacity is therefore not determined by varnish plant capacity alone. Only when the outsourced processes and logistics also move can the material actually reach the customer.
In 2025, the company brought its new Gunma plant, which required an investment of about 10 billion yen, into full operation. The investment budget for ABF from 2023 to 2030 totals 25 billion yen. Separately, a third site planned in Kani City, Gifu Prefecture, is scheduled to break ground in 2028 and begin operation in 2032. The land acquisition cost was about 1.2 billion yen, and the company reportedly envisions production capacity comparable to that of the Gunma plant.
However, the Gifu site has not yet come online, and neither its absolute production capacity nor its allocation to China has been disclosed. While the expansion plan, which anticipates demand and business continuity needs from 2030 onward, relates to mid- to long-term supply capacity, it does not answer the question of what is currently being allocated by region, customer, or product type.
Can Chinese Substitute Materials Demonstrate Formal Qualification?
As part of its response to next-generation packaging, Ajinomoto presents both the evolution of ABF and new core materials/process materials side by side. Under the company's plan, improvements to ABF and changes in package structure are proceeding in parallel. Adopting a new core material is not the same as replacing the interlayer insulating material used for lamination.
The clues for verifying today's report are clear: Will Ajinomoto confirm that the reduction has taken place and disclose the target period, product types, and reasons behind customer allocations? Will changes in delivery schedules or inventory be confirmed on the customer side? And can Chinese substitute films demonstrate formal mass-production qualification and sustained supply? Rather than total supply volume, what matters more on the ground in advanced packaging is which qualified materials can be allocated to which processes.