These Japanese AI winners don’t manufacture chips. Manufactures toilets, glass fiber, seasonings, etc.

As investors focus on the semiconductor industry, it turns out that some hidden gems with businesses that are completely different from high-tech are riding the AI ​​boom and becoming market winners.

TOTO is best known for its high-end toilets, Nittobo makes textiles and glass fibers, and Ajinomoto makes MSG seasonings. Shares have risen 78%, 63%, and 61%, respectively, this year as the company leverages its core technology to benefit from an AI supply chain.

TOTO manufactures ceramic electrostatic chucks used in semiconductor manufacturing equipment, and Nittobo supplies advanced glass fibers used in semiconductor package substrates.

Ajinomoto makes an insulating material known as “build-up film,” or ABF, used in semiconductor packaging for high-performance computers and data center servers.

All three companies reported rapid growth in businesses related to semiconductor demand in their full-year financial results ending March 31, highlighting the impact of the AI ​​boom.

The company’s Advanced Ceramics business achieved higher margins than its Home Equipment segment, thanks to demand from IoT, digital transformation, AI, and data centers for cutting-edge semiconductor equipment.

TOTO announced in its full-year financial results that its mainstay housing equipment division, which has been in business for more than 100 years, experienced a decline in sales and profits, but this was offset by increases in sales and profits in its advanced ceramics business.

The division increased annual revenue by 34% and operating profit by 42%, almost single-handedly driving the entire company to growth for the fiscal year.

Leveraging its expertise in ceramics, the company began manufacturing electronic chucks for semiconductor manufacturing equipment in 1988.

These chucks hold silicon wafers in place during the etching process inside semiconductor manufacturing equipment. TOTO says its ceramics are making a significant contribution to improving manufacturing yields for advanced chips.

“However, we do not believe one segment is better than the other. Although our advanced ceramics business is a high-growth segment, it has endured long periods of losses over its 40-year history to this point,” the company told CNBC in an email.

The company plans to grow both segments and “maintain a balanced ratio” for sustainable overall growth, and while the chip division remains volatile, it has “no plans” to shift away from its core home appliances business, which provides a stable foundation for the company’s balance sheet.

Nittobo said it continues to develop markets for its traditional glass fiber business, and electronic materials are already its mainstay. The company’s T-glass products, launched in 1984, are used in printed circuit boards and electronic components.

The company told CNBC that T-glass and other electronic materials are the “pillars” of its growth over the next decade, and that the demand for AI semiconductors is changing the way it allocates capital spending, research and development, and talent.

Nittobo announced that its electronic materials division’s sales and profits were boosted by strong demand for AI servers and strong sales of “special glass.”

Sales in the electronic materials business increased 20.4% year on year, and operating income increased 39.7% year on year.

According to CNBC calculations, the division contributed about 91% to Nittobo’s net sales growth in the last fiscal year, and the division’s profit increased by 5.5 billion yen (about $34 million), outpacing the company’s 4.4 billion yen increase in operating profit.

The company said that while glass fibers have been used for many years in many applications, including composites for plastic reinforcement, the company now sees that “electronic materials are very likely to remain our most important business into the future.”

In its financial results announcement, Nittobo stated, “We expect demand for special glass for electronic material applications, particularly for data center servers, network equipment, and semiconductor package substrates, to remain strong, and we will actively expand our production capacity to meet this demand.”

While the semiconductor division is becoming increasingly profitable for the company, applications for its traditional glass fiber business, such as composite materials and industrial materials, are also expanding.

Although Ajinomoto focuses on food products, it is also finding uses for its products, such as in the production of ABF insulation films used in semiconductors.

According to Ajinomoto’s website, byproducts from the MSG manufacturing process helped the company develop its technology, ultimately leading to the birth of ABF.

Released in 1999, it is now used in high-performance semiconductors such as CPUs.

Ajinomoto says the role of ABF is becoming more important as semiconductor packaging becomes more complex, and that AI, 5G and other advanced technologies will continue to drive demand for semiconductors.

The company did not respond to CNBC’s request for comment.

Ajinomoto does not divide ABF into its own segments, but in its full-year financial results, the “Healthcare and Others” segment, which includes ABF, said that sales increased by about 4% and business profit increased by 45.1% compared to the same period last year, due in part to increased sales of electronic materials.

The division accounted for more than a third of the company’s profits this fiscal year, and even surpassed Ajinomoto’s frozen foods division in terms of sales and profits.

The company says, “Continuous growth is expected in high-value-added, cutting-edge fields centered on ABFTM products.”

The company said it aims for a “one-to-one balance” between its food and aminoscience businesses, and ABF will contribute to the latter.