AI-Related Stocks Aren't Just Semiconductor Giants! Japanese Toilet, MSG, and Fiberglass Firms Benefit, Stock Prices Surge Up to 78%

While market attention remains centered on the semiconductor industry, several Japanese companies seemingly unrelated to high-tech have successfully entered the artificial intelligence (AI) supply chain using core technologies, emerging as hidden winners in this year’s stock market. TOTO, a major bathroom equipment manufacturer; Nittobo, a fiberglass producer; and Ajinomoto, a monosodium glutamate (MSG) maker, have seen their stock prices rise 78%, 63%, and 61% respectively this year.

All three companies have successfully applied their existing technologies to semiconductor manufacturing, riding the AI boom. Specifically, TOTO produces ceramic electrostatic chucks used in semiconductor equipment; Nittobo supplies high-end fiberglass for semiconductor packaging substrates; and Ajinomoto manufactures the insulating 'build-up film' (ABF), essential for high-performance chip packaging.

Annual financial reports ending in March show significant growth in semiconductor-related businesses across all three firms, underscoring the business opportunities created by the AI boom.

TOTO: Ceramic Technology Drives Growth

TOTO states that its advanced ceramics business has become more profitable than its residential equipment business, thanks to rising demand from IoT, digital transformation, AI, and data centers.

In its annual report, TOTO notes that while its residential equipment division—operating for over a century—saw declines in both revenue and profit, the growth of its advanced ceramics business fully offset the shortfall. The segment achieved a 34% year-on-year increase in revenue and a 42% rise in operating profit, almost single-handedly driving the company’s overall growth.

TOTO has used its ceramic expertise since 1988 to produce electrostatic chucks for semiconductor equipment, which secure silicon wafers during etching processes. The company says its ceramic products help improve yield rates in advanced chip manufacturing.

However, TOTO emphasizes that it does not consider advanced ceramics more important than its core residential equipment business. 'While advanced ceramics is a high-growth area, it incurred long-term losses over the past 40 years and only recently became profitable.'

TOTO views residential equipment as a stable foundation for its balance sheet, and given the volatility of the semiconductor industry, it has no plans to abandon its core business. Instead, it aims to maintain balanced development between the two sectors.

Nittobo: Electronic Materials as the Core for the Next Decade

Nittobo states that electronic materials have become its most important growth engine. The company’s T-glass fiberglass, introduced in 1984, is now widely used in printed circuit boards (PCBs) and electronic components.

Nittobo says T-glass and other electronic materials will be the pillars of growth over the next decade, and demand for AI chips is reshaping its capital expenditure, R&D, and talent allocation strategies.

Financial reports show that driven by demand for AI servers and specialty glass, the electronic materials business achieved a 20.4% year-on-year revenue increase and a 39.7% rise in operating profit.

According to CNBC calculations, 91% of Nittobo’s annual revenue growth came from its electronic materials business. The segment’s operating profit increased by 5.5 billion yen—exceeding the company’s total operating profit growth of 4.4 billion yen.

Nittobo notes that fiberglass was historically used mainly in composite materials like plastic reinforcement, but electronic materials are now 'likely to serve as the company’s most important business in the long term.'

The company expects strong continued demand for specialty glass used in data center servers, networking equipment, and semiconductor packaging substrates, and plans to actively expand production capacity. Even as semiconductor-related profits surge, Nittobo continues to expand the use of fiberglass in traditional areas like composites and industrial materials.

Ajinomoto: MSG Byproduct Gives Rise to ABF Material

Ajinomoto has successfully extended its food technology into semiconductor materials. According to its official website, a byproduct from MSG production ultimately led to the development of ABF (Ajinomoto Build-up Film) insulation film technology.

ABF was commercialized in 1999 and is now widely used in high-performance semiconductor packaging for CPUs and other chips.

Ajinomoto notes that as semiconductor packaging becomes increasingly complex, the importance of ABF continues to grow, and new technologies like AI and 5G will further drive semiconductor demand.

While Ajinomoto does not disclose standalone ABF financials, its financial report shows that the 'Healthcare and Others' segment—which includes ABF—achieved approximately 4% revenue growth and a 45.1% surge in operating profit, partly due to increased sales of electronic materials.

This segment now contributes over one-third of the company’s annual profit, surpassing its frozen food business in both revenue and profitability.

Ajinomoto plans to continue driving ABF product growth in high-value and cutting-edge applications and aims for its Food and AminoScience businesses to each account for half of the company in the future, with ABF serving as a key growth driver for the latter.