In August 2026, industry sources report that Ajinomoto, the dominant global leader in ABF films, has officially notified mainland Chinese clients of a 30 percent reduction in ABF film supply. This announcement has sparked significant attention within the domestic IC substrate and high-end computing chip packaging sectors. Ajinomoto commands over 95 percent of the global ABF film market share.
ABF film, short for Ajinomoto Build-up Film, represents a critical insulating material for IC substrates used in high-end CPUs, GPUs, FPGAs, ASICs, and other advanced chip applications. Material costs for ABF film account for approximately 30 percent of total substrate costs. The material originated from research into by-products of Ajinomoto's MSG production during the 1990s.
It achieved industrialization through cooperation with Intel in 1996 and reached mass production status in 1999. Over three decades, the company has established formidable industry barriers through extensive patent protection and a long-term supply chain certification system, maintaining a near-monopoly market structure. According to current data, Ajinomoto's monthly production capacity for ABF films exceeded 2 million square meters in the second quarter of 2026, with operations running at full capacity.
The company's expansion plans will not commence until 2028, with the third production facility expected to become operational only by 2032. This creates a significant capacity bottleneck in the medium to long term. Given the explosive growth in global AI computing demand and capacity constraints, Ajinomoto has prioritized supply for the Japanese domestic market and overseas core clients while reducing allocations to mainland China.
Industry forecasts indicate the global supply-demand gap for ABF substrates will reach 10 percent in the second half of 2026, expand to 21 percent in 2027, and climb to 42 percent in 2028. Morgan Stanley recently upgraded its industry outlook, raising the forecast for the global high-end ABF substrate supply-demand gap in 2030 from 15 percent to 22 percent. The supply tightening is creating dual pressures on pricing and delivery times.
Market sources indicate ABF film delivery cycles have extended beyond six months. Ajinomoto simultaneously notified clients that a new pricing system will take effect in the third quarter of 2026, with maximum product price increases reaching up to 30 percent. Mainland China currently maintains an ABF film self-sufficiency rate below 5 percent.
Leading domestic IC substrate manufacturers including Shennan Circuits, Xingsen Technology, and Shenghong Electronic depend heavily on imported Ajinomoto materials. The 30 percent supply reduction exposes these companies to direct risks of raw material shortages, constraining their production capacity for high-end ABF substrates. Rising raw material costs combined with insufficient supply are elevating expenses for upstream and downstream enterprises, compressing profit margins and indirectly slowing the pace of domestic high-end computing chip packaging development.
The supply crisis has simultaneously created opportunities for domestic material substitution. Multiple Chinese material companies are advancing research, development, and validation of build-up films benchmarked against ABF films. Huazheng New Materials is progressing research and mass production of CBF films, Lianhua Holding is developing NBF films, Hongchang Electronics is developing GBF films, and Shengyi Technology is pursuing ABF-like materials.
Industry experts acknowledge, however, that domestic materials must still undergo long-term reliability certifications from downstream substrate factories and packaging companies. Comprehensive large-scale substitution will require additional time. Industry analysts expect domestic substrate manufacturers may address the raw material supply shock in the short term through optimized order structures and diversified procurement channels.
Over the medium and long term, supply chain security concerns should accelerate research investment, production line construction, and downstream validation efforts for domestic build-up insulating materials. The shift in ABF film supply patterns will likely force accelerated breakthroughs in key upstream semiconductor packaging materials, reducing reliance on single overseas manufacturers.
Source: news.chemnet.com