Sakai Chemical Industry’s century-old expertise in producing fine powders for face makeup used by geisha is finding a lucrative new use — powering the artificial intelligence boom. Production capacity is quickly filling up at the Osaka-based company, which provides raw materials for capacitors necessary in AI data centers. Until recently, such production was a side business for Sakai Chemical, which has spent decades perfecting the production of ultra-fine and uniform particles — whether for safe, lead-free base material for traditional Japanese face powders, or for chemical compounds that store big electrical charges inside tiny components in servers.
The last year has transformed Sakai Chemical into a little-known tech supply chain linchpin. The company’s now calculating how much more production capability it needs to add, according to its President Toshiyuki Yagura. A double-digit increase in manufacturing capacity is likely, according to Yagura.
Advanced multilayer ceramic capacitor (MLCC) makers — such as clients Murata Manufacturing and Taiyo Yuden — raise their order forecasts at every meeting, he said. Sakai Chemical will make a decision regarding capital expenditure by March, he added. The pace of AI-led momentum has eased somewhat, but he said the boom will likely last through 2027 at least.
Last quarter, Sakai Chemical’s electronics materials segment profit rose 22%, even as company-wide operating profit fell 10%, hurt by weak demand for building materials in Japan and changing trends in the sunscreen market. Electronics materials are now the company’s largest profit generator, surpassing its mainstay plastic additives business. The company’s stock price is up about 15% this year.
The 108-year-old company started out by supplying high-purity zinc oxide as a safe alternative to the white lead historically used in the iconic makeup of geisha and kabuki entertainers. The older form of makeup provided a smooth, brilliant and long-lasting white finish, but caused chronic lead poisoning in Japan’s artist class. Sakai Chemical offered a safe material that offered white, opaque coverage that spread easily over the skin.
From makeup, Sakai Chemical soon expanded into materials used in products ranging from sunscreens and car tires to plastics and barium compounds. The AI spending rush has put a spotlight on the company’s expertise in barium titanate, a critical chemical compound needed to make MLCCs — tiny components that regulate power flow in electronics. High-end capacitors used in AI servers need to be made from ultra-fine, uniform and high-purity barium titanate particles.
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