China Lab-Grown Diamond Producers Shift 2 Million Carats to High-Tech Sector
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Chinese lab-grown diamond makers are cutting back gemstone production to supply thermal management components for artificial intelligence servers and semiconductors as retail prices drop.
Around 70 per cent of the 2 million carats produced annually at Feng Canjun’s factory in October 2026 goes into jewellery, but the Chinese entrepreneur is pivoting capacity toward advanced materials.
Feng plans to raise the share of functional materials at the facility to more than 50 per cent by 2030, reducing gemstone output as industrial demand accelerates.
At the Jiaruifu factory run by Feng Canjun in Zhengzhou, about 70 per cent of its 2 million carats in annual production currently supplies jewellery retailers. Feng plans to push functional material volume past 50 per cent by 2030, reducing jewellery output to a ceiling of 30 per cent.
Capital Reallocation to Hardware
Capital expenditure across central China is shifting away from consumer jewellery cutting lines. Henan Liliang Diamond redirected 1 billion yuan, equivalent to $149.18 million, from an existing gem-grade expansion programme to finance a new functional-diamond manufacturing project, according to a corporate filing.
The technical driver is heat dissipation in high-performance computing. Data centre electricity demand will more than double to roughly 945 terawatt-hours by 2030, according to an International Energy Agency forecast. That power load concentrates heat on silicon dies, creating bottlenecks for high-density AI clusters.
Chinese media reported that Huawei and Taiwan Semiconductor Manufacturing Company are exploring synthetic diamonds for chip cooling. Lenovo launched a consumer laptop in China incorporating a diamond-copper composite cooling element, while Intel chief executive Lip-Bu Tan made a personal investment in US diamond-wafer maker Diamond Foundry.
Thermal Management Supply Chains
Laboratory testing demonstrates direct hardware gains from the material shift. Research published by the Ningbo Institute of Materials Technology and Engineering showed diamond-copper cooling modules improved chip heat dissipation by 80 per cent and lifted processing performance by 10 per cent.
“Feng plans to push functional material volume past 50 per cent by 2030, reducing jewellery output to a ceiling of 30 per cent.”
This adoption directly targets market share held by established chemical suppliers. Industrial materials groups including Germany’s Henkel, Dow in the US and Japan’s Shin-Etsu Chemical currently dominate chip thermal interfaces with silicones, adhesives and metal pastes.
Jewellery retailers in Asia face shrinking synthetic gemstone inventory values as factory supply lines pivot. Downstream gemstone retail represents an estimated $100 billion annual global market, but factory operators see better pricing use in high-spec computing hardware than in consumer shopfronts.
Global Substrate Competition
Western and Japanese suppliers are building parallel capacity to counter China’s factory dominance in functional stones. Element Six, the synthetic-diamond division of De Beers, teamed up with Japan’s Orbray to manufacture three-inch single-crystal diamond wafers, while preparing two-inch production in Oregon.
European capital is backing similar efforts. The Spanish government committed €753 million to support a Diamond Foundry manufacturing facility in Trujillo to produce synthetic diamond substrates for European semiconductor manufacturing.
In the US market, cooling specialist Frore Systems introduced its LiquidJet Diamond component, an integrated coldplate module designed for high-density processors.
The Manufacturing Hurdle
Functional diamonds require far stricter purity controls than drill bits or gemstone baguettes. Semiconductor-grade wafers demand precise lattice alignment and minimal defect density, technical standards that many regional Chinese press operators cannot yet hit at commercial scale.
The near-term commercial volume will stay in thermal heat spreaders rather than pure diamond semiconductor substrates. Heat spreaders tolerate lower purity tolerances while delivering immediate thermal relief to server racks.
Factory operators in Henan are tracking corporate order volumes from domestic server assemblers as China accelerates local chip packaging buildouts. The transition turns Henan Liliang Diamond’s redirected 1 billion yuan facility into the primary test of whether Chinese gemstone presses can secure sustained industrial orders before 2030.
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