Securing the Substrate Behind Every Chip
A U.S. Strategy for Ajinomoto Build-Up Film (ABF)
By
Alexis Eskenazi, Joel Christoph, Angesom Teklu, Kaushik Reddy
July 31, 2025
How the U.S. can de-risk semiconductor supply chains by jumpstarting domestic ABF production.
Authors
Key Advisors
Originally Published
July 31, 2025
Research program
AI Economic Policy Fellowship: Spring 2025
Abstract
Ajinomoto Build-Up Film (ABF) is a single-source substrate essential to advanced semiconductor packaging, yet no U.S. entity currently produces it or holds licensing rights. This creates three core challenges for American semiconductor supply chain resilience: total import dependence on a foreign-controlled material, geographic overconcentration in East Asia, and a policy landscape that has failed to address proven chokepoints. This brief assesses federal tools—namely, the CHIPS Act, Defense Production Act, and Export-Import Bank financing—for their ability to catalyze domestic ABF production. We find that a narrow window of opportunity exists following Ajinomoto’s 2025 leadership shift and planned production expansion of ABF. Timely federal action could secure an American-Japanese licensing deal and bring a portion of ABF manufacturing onshore. We identify the most viable policy pathways, surface key implementation gaps, and offer concrete recommendations to align industrial policy with long-term national security goals.
Executive Summary
Nearly every high-performance CPU and GPU in the world relies on a foreign-controlled material few have heard of: Ajinomoto Build-Up Film (ABF), an ultra-thin dielectric insulating material that facilitates micron-scale routing from the silicon die toward the circuit board. Since ABF’s commercial debut in 1999, its developer, the Ajinomoto Group, has retained ≥98% of the global market by licensing production exclusively through controlled IP-sharing agreements with a small handful of East Asian partners. However, the fragility of this supply model was exposed during the pandemic-era PC boom: Broadcom’s router component lead times jumped from 63 weeks to 70 weeks because of ABF unavailability, and Intel, AMD, and NVIDIA likewise blamed substrate shortages for stalled outputs.
Compounding this vulnerability, Taiwan represents ABF's largest regional consumer, accounting for 40% of global demand, a reflection of its 68% share in global semiconductor manufacturing. Eighty percent of Japanese container traffic transits the Taiwan Strait, while China is rapidly investing in alternatives to reduce its dependence on the Ajinomoto Group’s product. As a result, the United States has been left entirely import-dependent on a geopolitically-fraught material essential for advanced semiconductors, given no U.S. entity manufactures ABF or has secured licensing rights.
In February 2025, Shigeo Nakamura, ABF’s original inventor, became CEO of the Ajinomoto Group and unveiled a ¥25 billion ($166M) plan to grow ABF production capacity by 50% by 2030. Nakamura’s deep expertise in ABF and new leadership role has opened a narrow window for a U.S.-Japan joint venture, ideally backed by federal funding programs. Currently, the primary existing funding mechanism for semiconductor manufacturing in the U.S., the CHIPS and Sciences Act of 2022, lacks explicit prioritization of organic substrates like ABF. As of May 2025, all active CHIPS funding opportunities have closed, and future allocations remain uncertain amid the Trump Administration’s redirection of CHIPS governance to a new “Investment Accelerator” within the Department of Commerce. Without structural reform, current CHIPS Act processes offer no viable path for an American firm to enter the ABF market. This brief evaluates three federal levers for spurring U.S.-based ABF production:
1
The CHIPS and Sciences Act was designed to restore U.S. semiconductor leadership with $54 billion in funding, but its implementation effectively excludes packaging materials like Ajiomoto Build-Up Film (ABF). The financing package’s $11 billion R&D stream prioritizes nascent technologies that are not yet commercially viable over legacy components or those critical to national security—a misalignment in the project evaluation rubric that the federal government should consider revising. A structural catch-22 has emerged, where Ajinomoto is unlikely to license ABF to an U.S.-based company without a capital incentive that reduces high, upfront American production costs, yet federal funding is likely inaccessible without a commitment from Ajinomoto.
2
The Defense Production Act Title III program possesses the authority to issue grants, loans, and purchasing agreements to expand domestic capacity of materials that align with the Department of Defense’s strategic priorities. Given the precedent established by recent Title III awards in advanced packaging, this represents a high-viability pathway to reduce domestic production costs.
3
The Export-Import Bank “Make More in America” Initiative, launched in 2022, intended to support domestic manufacturing in sectors deemed vital to national security and economic competitiveness. Under MMIA, EXIM can provide direct loans or loan guarantees to U.S.-based projects that are expected to have at least 25% of their outputs exported. However, many first-of-kind onshoring ventures, like an ABF producer, would struggle to meet MMIA’s three-year revenue history criteria, which should prompt the federal government to consider directing EXIM to adapt this standard to accept other signs of project viability.
Get research updates from Convergence
Leave us your contact info and we’ll share our latest research, partnerships, and projects as they're released.
You may opt out at any time. View our Privacy Policy.