China’s lab-grown diamond industry is shifting its focus from jewelry to high-tech applications such as semiconductors, artificial intelligence (AI) infrastructure, and advanced electronics, reflecting growing strategic ambitions amid evolving global technology competition.
Currently, about 70% of the two million carats of synthetic diamonds produced annually at Feng Canjun’s factory in Henan province are used in jewelry. However, Feng, who founded the operation in 2019, aims to have over 50% of his output directed toward functional materials by 2030, while limiting jewelry applications to a maximum of 30%. Henan province accounts for roughly 80% of China’s synthetic diamond production, and Feng’s facility, equipped with 550 high-pressure, high-temperature machines, has increased annual output tenfold since inception.
China accounts for approximately half of the world’s supply of lab-grown diamonds, a sector that is experiencing intensified competition and falling prices. Industry analysts suggest that the move toward industrial uses could elevate the sector’s importance within the broader context of US-China technology rivalry. Synthetic diamonds possess properties beneficial to semiconductor manufacturing, quantum technology, and thermal management — particularly relevant given the surging demand for data center capacity driven by AI.
The International Energy Agency projects data center electricity consumption to more than double by 2030, driven largely by AI workloads, heightening the need for effective cooling technologies to manage heat generated by advanced chips. Diamond-based materials have attracted interest for their superior thermal conductivity, which could enhance chip performance and efficiency. Chinese technology firms such as Huawei and TSMC are reportedly exploring synthetic diamond applications for chip cooling, while Lenovo has introduced a laptop model featuring diamond-copper cooling materials. In the United States, Intel CEO Lip-Bu Tan has invested in Diamond Foundry, a producer focused on chip-grade diamond wafers.
Several Chinese companies are ramping up investments to support this strategic pivot. For instance, Henan Liliang Diamond announced plans to reallocate 1 billion yuan (approximately US $149 million) from expanding gem-grade production to developing industrial diamond projects. Research from the Ningbo Institute of Materials Technology & Engineering demonstrated an 80% improvement in heat transfer and a 10% increase in chip performance using diamond-copper cooling modules.
Synthetic diamond heat spreaders could compete with existing thermal-management materials currently supplied by global chemical firms including Henkel, Dow, and Shin-Etsu Chemical, though these companies have not commented on the potential competition.
Globally, synthetic diamond advancements continue, with firms such as De Beers’ Element Six and Japan’s Orbray working on single-crystal diamond wafers, while Spain invests heavily in a new Diamond Foundry facility aimed at producing synthetic diamond substrates for semiconductor use. In the US, Frore Systems recently introduced a diamond-integrated thermal solution designed to improve cooling efficiency.
Chinese regulatory authorities have placed related synthetic diamond technologies and components under export controls since 2024, with additional controls introduced in 2025 but delayed following a US-China agreement aimed at easing tensions in sensitive technological sectors.
Although the industrial applications of synthetic diamonds remain in early stages, the industry sees significant growth potential. Margins for industrial-grade synthetic diamonds tend to be higher than those for gem-quality stones, encouraging producers to transition toward next-generation uses. Feng projects the industrial diamond market could grow into a billion—or even trillion—yuan market in the coming decade, underscoring the sector’s evolving role in the global technology supply chain.