Japanese Legacy Brands Adapt to Technological Demands

Japanese companies, traditionally known for their consumer products, are increasingly diversifying into high-tech sectors, particularly semiconductors. Ajinomoto, primarily recognized for its sauces and seasonings, has emerged as a leader in the semiconductor industry through its development of Ajinomoto Build-Up Film (ABF). This nano-thin film is crucial for electrical insulation in high-performance computing, and the segment is projected to generate profits of 62.6 billion yen (approximately S$515 million) by March 2026, marking a 37.3% increase from the previous year.

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Ajinomoto is not alone in this trend. Other legacy brands are also leveraging their core competencies to penetrate the semiconductor market. Daikin, known for air-conditioning systems, supplies essential high-purity chemical materials for semiconductor etching. Kyocera, originally a ceramics manufacturer, now plays a significant role in semiconductor packaging, particularly for advanced applications in artificial intelligence (AI) and 5G technologies.

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Moreover, Kao Corporation, recognized for its consumer goods, has innovated by creating a substance from waste plastic that enhances the durability of asphalt, showcasing its expertise in interface science. Olympus and Fujifilm have pivoted towards medical equipment, with Olympus capturing 70% of the market for gastrointestinal endoscopes, while Fujifilm has diversified into various imaging technologies and cosmetics.

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In response to evolving consumer preferences, companies like Glico and Calbee are expanding their product lines. Glico has introduced almond milk in Singapore, while Calbee launched Body Granola, a personalized health-focused cereal service. Additionally, Asahi and Kirin, two major beer producers, are shifting their focus towards pharmaceuticals and biotechnology, with Kirin's health sciences division contributing to 30% of its revenue.

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Kirin Holdings president Takeshi Minakata emphasized that this shift is not merely diversification but a strategic application of their fermentation and biotechnology expertise. Both companies have made acquisitions to bolster their capabilities in these new sectors.

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The diversification strategies of these Japanese legacy brands are significant amid global supply chain disruptions. By moving into specialized niches, they maintain competitive advantages and create dependencies on Japanese materials and components in international markets. As Ulrike Schaede, a professor at the University of California San Diego, noted, many Japanese companies hold substantial global market shares in critical input materials, which often go unnoticed by the general public.

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Ulrike Schaede remarked, “By moving into difficult-to-make and difficult-to-copy global niches, they can maintain global competitive advantage.” This sentiment reflects the broader strategy of Japanese companies to adapt and thrive despite challenges posed by regional competitors.

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While the growth projections for the semiconductor-related segments are optimistic, specific earnings from these divisions are not disclosed by companies like Ajinomoto, leaving some uncertainty about the exact financial impact of these diversifications.

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• “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,” — Ulrike Schaede, Professor of Japanese Business

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• “This is not mere diversification or expansion into unrelated fields, but rather the application of skills and knowledge centred on fermentation and biotechnology,” — Takeshi Minakata, President of Kirin Holdings

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Through these strategic adaptations, Japanese legacy brands are not only redefining their identities but also positioning themselves as vital players in the global technological landscape.

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