The Surprising Connection Between MSG and Computer Chips: The Race to Break Ajinomoto's Monopoly

Sunday - April 21 2024, 04:09 UTC - 7 months ago

A little-known connection between MSG and computer chips has caught the attention of researchers and policymakers. A Japanese company controls over 90% of a crucial material used in chipmaking, prompting a race to find an alternative. Government funding and the intricate nature of chipmaking make breaking the monopoly a challenge. China's push for self-sufficiency in the face of a US-led blockade adds another level of urgency.

I don’t know about you, but I only learned last week that there’s something connecting MSG and computer chips. Inside most laptop and data center chips today, there’s a tiny component called ABF. It's a thin insulating layer around the wires that conduct electricity. And over 90% of the materials around the world used to make this insulator are produced by a single Japanese company named Ajinomoto, more commonly known for commercializing the seasoning powder MSG in 1909. It's a surprising connection, but one that has significant implications for the global chip industry.

Hold on, what?James talked to Thintronics, a California-based company that’s developing a new insulating material it hopes could challenge Ajinomoto’s monopoly. It already has a lab product with impressive attributes but still needs to test it in manufacturing reality.Beyond Thintronics, the struggle to break up Ajinomoto’s monopoly is not just a US effort.

"It’s interesting that there’s this parallel competition going on," James told me when we recently discussed his story. "In some ways, it’s about the materials. But in other ways, it’s totally shaped by government funding and incentives." For decades, the fact that the semiconductor supply chain was in a few companies’ hands was seen as a strength, not a problem, so governments were not concerned that one Japanese company controlled almost the entire supply of ABF. Similar monopolies exist for many other materials and components that go into a chip.

Meanwhile, China is being cornered by a US-led blockade to deny it access to the most advanced chip technologies. While materials like ABF are not restricted in any way today, the fact that one foreign company controls almost the entire supply of an indispensable material raises the stakes enough to make the government worry. It needs to find a domestic alternative in case ABF becomes subject to sanctions too.

"You can look at any dielectric film supplier (many from Japan and some from the US), and they have all at one time or another tried to break into ABF market dominance and had limited success," Venky Sundaram, a semiconductor researcher and entrepreneur, told James.

It’s not as simple as just swapping out ABF and swapping in a new insulator material. Chipmaking is a deeply intricate process, with components closely depending on each other. Changing one material could require a lot more knock-on changes to other components and the entire process. "Convincing someone to do that depends on what relationships you have with the industry. These big manufacturing players are a little bit less likely to take on a small materials company, because any time they’re taking on new material, they’re slowing down their production," James said.

As a result, Ajinomoto’s market monopoly will probably remain while other companies keep trying to develop a new material that significantly improves on ABF.

That result, however, will have different implications for the US and China. All these factors give the Chinese government an even greater sense of urgency to become self-sufficient. The country has already been investing vast sums of money to that end, but progress has been limited, with many industry insiders pessimistic about whether China can catch up to the US.