A view of Japan’s Nihonbashi business district. - Bloomberg
TOKYO: Think of Ajinomoto and, chances are, what springs to mind is the Japanese maker of sauces and umami seasonings.
Yet, the company’s products are not just confined to kitchen shelves. Ajinomoto is also omnipresent in the technology sector, embedded in semiconductors and the motherboards that power high-performance central processing units (CPUs) for computers and data centres worldwide.
Quietly, since the initial adoption in the 1990s of what is known simply in the industry as ABF (Ajinomoto Build-Up Film), Ajinomoto has become the undisputed world leader in nano-thin films critical for electrical insulation and processing capabilities.
It is now poised to ride the technological crest amid a booming demand for chips in an artificial intelligence (AI) age – even as sauces and seasonings remain its core business and primary revenue driver.
While the company does not report specific earnings for ABF, which is categorised under “healthcare and others”, the segment is witnessing sharp growth. Business profits for this division are forecast to reach 62.6 billion yen (S$515 million) for the financial year ending March 2026, a 37.3 per cent surge from a year ago.
Such is the counterintuitive world of Japanese corporate diversification. On paper, such side hustles seem diametrically at odds with the brand identity.
Yet this could not be further from the truth. Many of these legacy companies are leveraging their deep, core expertise – often in materials science or precision engineering – to evolve and find new uses for their proprietary technology.
In doing so, they have come to dominate critical global niches far removed from their consumer brands.
Professor Ulrike Schaede of Japanese business at the University of California San Diego argued that this is how Japanese companies have maintained their competitive edge, even as the dominant narrative suggests that Japanese brands are losing their lustre to regional challengers such as China and South Korea.
“Today, you walk into somebody’s living room, and most of the appliances are no longer Japanese. Many people conclude that this means Japan has lost it,” she told a webinar hosted by Tokyo-based graduate business school Globis in September.
However, she added: “There are a lot of Japanese companies that have very high global market shares in input materials, for example, in semiconductor production – things that you would never know about unless you are a semiconductor expert.”
What this proves is that companies have proven themselves capable of adapting, she said. And this is valuable for Japan as global supply chains face turmoil, she added, given that the niche leads to trade dependencies on Japan, where it makes the materials that are exported abroad to be assembled.
“Consumers may not realise it, but Japanese components and materials have become crucial to global products,” she said. “By moving into difficult-to-make and difficult-to-copy global niches, they can maintain global competitive advantage.”
Ajinomoto, which developed ABF while experimenting with how to effectively use the amino acid side products of its seasoning production, is not alone in this strategy, nor the only one with side businesses in semiconductors.
Daikin, known globally for its air-conditioners, supplies high-purity chemical materials necessary for the semiconductor etching process.
Kyocera, which was founded as a ceramics maker and is now known for office printers, is a major player in semiconductor packaging, providing ceramic substrates for advanced applications in AI, 5G and mobility.
The trend is also evident in public and medical infrastructure.
Kao Corporation, best known for facial foam, laundry detergent and baby diapers, creates a substance from waste plastic that, when added to asphalt, can make roads and pavements more durable to circumstances such as heavy usage and fuel damage.
This pivot was based on its expertise in interface science – the study of how substances like oil and water interact in the soaps and detergents made by Kao. And the company touts its environmental impact: About 1,430 plastic bottles are used to create the asphalt modifier in every 100 sq m of paved roads.
Sometimes, this pivot is a necessary survival strategy to avoid irrelevance. Companies such as Olympus and Fujifilm found a second wind in making medical equipment, thus avoiding the fate of Kodak when film cameras went out of fashion.
Both leveraged their expertise in imaging technology, and Olympus now is a global leader with 70 per cent of the market share for gastrointestinal endoscopes.
Fujifilm, meanwhile, makes an array of devices from X-rays and ultrasound to MRI and CT scan machines. It also ventured into cosmetics with its Astalift brand, which was developed by applying its deep knowledge of collagen – a key ingredient in both photographic film and firm skin.
Meanwhile, other legacy companies are not sitting still and are adapting to consumer trends. Noticeably, in response to shifts towards healthier lifestyles after the Covid-19 pandemic, Japan’s alcohol and snack makers have been increasing their focus on healthcare and wellness.
Glico, known for its Pocky coated biscuit sticks, manufactures healthy products like almond milk, which it began selling in Singapore in 2024.
Calbee, famous for its potato chips and prawn crackers, launched Body Granola in Japan in April 2023.
Unlike Calbee’s mass-market snacks, Body Granola is a personalised subscription service with a final product that is customised based on tests and analyses of an individual user’s gut health, to derive a cereal containing an optimum mix of prebiotic ingredients that can nurture intestinal bacteria.
Beermakers Asahi and Kirin, too, are confronting a trend where domestic thirst for lager may be drying up, with an increasing number of teetotallers.
In addition to non-alcoholic options, they have re-engineered their business focus towards pharmaceuticals and biotechnology, leveraging similarities in fermentation processes used in both beer production and life sciences.
The two companies each made notable acquisitions for undisclosed sums in 2025, with Asahi buying German biotechnology firm Leiber, while Kirin snapped up Australian health supplements firm Blackmores.
Asahi has products made using dried yeast, including baby formula and nutritional supplements.
Kirin, whose businesses in pharmaceuticals and health sciences account for about 30 per cent of its revenue, has been working with universities in Japan and overseas on clinical trials and academic research in areas as varied as immunology, ageing care, retinal diseases and nutrition.
Its findings have been presented at scientific conferences and published in journals, with Kirin Holdings president Takeshi Minakata saying at an investors’ event on Dec 17 that this is primed to be a key avenue for growth.
“This is not mere diversification or expansion into unrelated fields, but rather the application of skills and knowledge centred on fermentation and biotechnology,” he said. - The Straits Times/ANN
