Greetings from sunny Dubai! WIRT will be here for the foreseeable future.
If you’re a gamer like me, you may have noticed that it’s near impossible to get a Playstation 5 recently. That’s been a big bump to Sony sales, but it’s not like they are deliberately withholding supply like a luxury watch brand to boost perceived demand. Sony wishes it could churn out more units but it’s run up against a global shortage of semiconductors.
This global shortage is also affecting automakers.
So why can’t we make enough chips?
Well one thing is that all industries compete for chips and as automakers adjusted their demand down in the face of COVID, suppliers filled their order books from other industries.
We also have a boom again in cryptocurrency mining upping demand for high end graphics cards.
It turns out its not just chips, but there’s bottle-necks of other materials including the ABF substrates and packaging alongside chips. What the heck is ABF? It’s Ajinomoto Build-up film. A temperature resistant resin developed in the 1990s that has become a key material in insulating complex chipsets. Resins replaced the technology at the time, inks that took too long to dry and did not allow the layering of additional copper chipsets on top of the insulation material.
Well you’d expect that Ajinomoto must be a huge company focused on global chip manufacture and packaging. Indeed it is a very large company doing over a trillion JPY in annual revenue with the very high tech company slogan of “Eat Well, Live Well”.
See Ajinomoto is also the world’s largest producer of MSG (monosodium glutomate) food flavourings. What is MSG? Ask Uncle Roger.
In fact, making ABF is actually a bit of a side hustle for Ajinomoto who came up with the product when they were wondering what to do with their manufacturing by-products. It turns out that expertise in amino-acid manufacture and organic chemistry can have some useful side benefits!
There’s a suitably 90s company film about how they developed the product.
Nowadays they manufacture as well as licence to pure-play integrated circuit substrate manufacturers in China, Taiwan and Korea but it seems that capacity expansion has not kept up with that of chips. So weirdly the fact you got disappointed at Christmas when Santa didn’t deliver a Playstation 5 is partly due to you not using more MSG in your cooking.
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America’s most manipulative billionaire.
ARK Investment Management was the fastest growing ETF last year now above $50 billion with its focus on high flyers like Tesla (where they have a $7,000 price target). The fund has gained a cult following in Korea where their founder Cathie Wood has gained the nickname “money tree”.