Chinese lab-grown diamond manufacturers are shifting their production focus toward high-tech industrial applications, including artificial intelligence (AI) servers and semiconductors. Companies that previously primarily supplied the gemstone jewelry market are now investing in functional materials to capitalize on the increasing cooling requirements of advanced computing hardware.
This transition follows a period of overcapacity that saw the price of rough lab-grown diamonds fall from $100 per carat in 2022 to $15 per carat in 2024. China currently produces approximately half of the world's lab-grown diamonds, with the central province of Henan accounting for 80% of the country's output. Projections from industry analysts suggest China’s total synthetic diamond production could reach 52 million carats by 2030.
Several technology firms and researchers are exploring diamond-based thermal management. In April 2026, the Ningbo Institute of Materials Technology & Engineering reported that diamond-copper cooling modules improved heat transfer by 80% and chip performance by 10%. In June 2026, Henan Liliang Diamond announced it would redirect 1.028 billion yuan ($149.18 million) originally intended for gem expansion toward functional-diamond research and production. Additionally, an undisclosed U.S. buyer reportedly placed a $300 million order for AMD GPUs cooled with lab-grown diamonds in March 2026.
In the first half of 2026, the A-share lab-grown diamond sector in China rose by 71.4%, significantly outperforming the broader Shanghai Composite Index. For individual entrepreneurs, the change is substantial; factory owner Feng Canjun plans to reduce his jewelry-grade production from 70% to 30% by 2030, while increasing functional material production to over 50%. Consumers in the jewelry market have already noticed a significant price change, with one-carat lab-grown diamonds costing less than 2,000 yuan ($298) compared to over 100,000 yuan for natural equivalents.
The strategic shift also carries geopolitical weight, as China’s dominance in synthetic diamond production—supplying 95% of the global market according to the China Machine Tool & Tool Builders' Association—creates new supply-chain considerations for the U.S. and Europe. Beijing has already implemented export controls on diamond-making machinery and key components. Future developments include the construction of a €753 million ($868 million) Diamond Foundry plant in Spain to produce diamond substrates and the scheduled one-year postponement of certain synthetic diamond export restrictions following a U.S.-China deal in October 2025.