China’s lab-grown diamond makers pivot to AI and chip sectors
Chinese synthetic diamond producers, led by Henan-based Jiaruifu, are shifting from jewellery to high-tech uses such as semiconductor cooling and AI infrastructure. The transition could give China new leverage in the US-China technology rivalry, as demand from data centres and chip makers grows.
Around 70 per cent of the 2 million carats of lab-grown diamonds produced annually at Feng Canjun’s factory currently go into jewellery. But the entrepreneur is betting that the future of China’s synthetic diamond industry lies in supplying advanced materials for semiconductors, AI servers and other high-tech applications.
“I am looking to raise the share of my products used in functional materials to more than 50 per cent by 2030 while reducing the share going to the jewellery sector to a maximum of 30 per cent,” Feng said.
China’s lab-grown diamond producers, which account for around half of the world’s supply, are looking beyond gemstones as competition intensifies and prices come under pressure. The shift could give the industry greater strategic significance in the US-China technology rivalry. If synthetic diamonds become more widely used in semiconductors and thermal management in AI infrastructure, China’s production dominance could emerge as another supply-chain vulnerability for the US.
“The transition is now the defining structural story in the diamond industry and one with direct implications for global technology supply chains,” said Manan Goenka, engagement manager at Ken Research, a consultancy.
Thermal management is viewed by analysts as a nearer-term opportunity, while the use of diamonds as a semiconductor material is further away from widespread commercial adoption. Chinese media have reported that Huawei and TSMC are exploring synthetic diamonds for chip cooling, while Lenovo has launched a consumer laptop in China that it says uses a diamond-copper cooling material. In June, Intel CEO Lip-Bu Tan said he personally invested in Diamond Foundry, a lab-grown diamond maker developing chip-grade diamond wafers.
Some Chinese producers are beginning to invest in anticipation of demand. Henan Liliang Diamond plans to redirect 1 billion yuan ($149.18 million) in funds originally raised to expand gem-grade diamond production to a new functional-diamond project, according to a June filing. In April, diamond-copper cooling modules developed by Chinese researchers improved heat transfer from chip modules by 80 per cent and raised chip performance by 10 per cent, according to the Ningbo Institute of Materials Technology & Engineering.
Beijing has already moved to incorporate the technology into its export control regime, placing related machinery and key components under restrictions in 2024. It added more synthetic diamond products to its list in 2025, though implementation was postponed for a year under a US-China deal reached last October. “The broader implication is that synthetic diamonds could increasingly become part of the strategic trade-policy conversation surrounding semiconductors, rare earths and advanced manufacturing,” said Goenka.