Chinese Diamond Producers Shift Focus to AI and Semiconductors

Chinese lab-grown diamond producers are shifting their strategic focus from the jewelry market toward high-tech industrial applications, specifically targeting semiconductors, AI servers, and thermal management. This transition follows falling prices in the gemstone sector and a surge in demand for data center cooling capacity driven by AI growth. Companies including Huawei, TSMC, and Lenovo are exploring synthetic diamonds for chip cooling.

Feng Canjun, owner of the Jiaruifu factory, is redirecting production toward functional materials, while Henan Liliang Diamond plans to allocate 1 billion yuan to a new functional-diamond project. This shift has strategic implications for the U.S.-China technology rivalry, as China produces approximately half of the world's synthetic diamonds. In response, the Government of China has incorporated synthetic diamond machinery and components into its export control regime.

Similar efforts to develop diamond wafers for semiconductors are occurring globally. The Government of Spain is investing 753 million euros in a Diamond Foundry plant to establish Europe's first large-scale producer of diamond substrates. Additionally, Element Six and Orbray are preparing 2-inch diamond wafers for production in the United States.