Lab-Grown Diamonds Target AI Chips as China's Producers Pivot From Jewelry to Tech Cooling

Lab-Grown Diamonds Address the Heat Problem in AI Chips

As AI chips demand more power and generate increasing heat, Chinese lab-grown diamond producers are pivoting from jewelry manufacturing to thermal management in AI infrastructure. The shift creates an unusual intersection: AI companies need better chip cooling solutions, while China's synthetic diamond industry—which produces around half of the global supply—seeks new growth markets beyond gemstones where oversupply has pressured prices1

1

2

2

.

The appeal lies in diamond's exceptional heat conduction properties rather than appearance. As a heat spreader, diamond transfers concentrated heat from a processor's hottest areas to cooling systems—a capability becoming increasingly critical as AI processors require more power and data center demand surges. The International Energy Agency projects data center electricity consumption will more than double by 2030 to about 945 terawatt-hours, roughly equivalent to Japan's annual power consumption, with AI being the main driver2

2

.

Diamond-Copper Cooling Module Delivers Measurable Performance Gains

Chinese researchers have demonstrated diamond's potential in semiconductor cooling. In April, a diamond-copper cooling module developed by the Ningbo Institute of Materials Technology & Engineering improved heat transfer from chip modules by 80% and increased chip performance by 10%1

1

2

2

.

Commercial diamond-based cooling solutions are emerging. In October, Silicon Valley firm Frore Systems introduced LiquidJet Diamond, a liquid-cooling plate that precisely positions diamond over a graphics processor's hot spots. Frore Systems claims the design can lower graphics processor temperatures by 16 to 22 degrees Celsius and increase AI tokens generated per watt by 30% to 35% compared to traditional cold plates. The technology is being developed for next-generation CPUs, including AMD's MI-series accelerators and Nvidia's Rubin Ultra1

1

.

China's Production Dominance Creates Strategic Supply Chain Implications

China's Henan province accounts for 80% of the country's synthetic diamond output. Entrepreneur Feng Canjun, whose factory produces 2 million carats annually with 70% currently going to jewelry, aims to raise the share used in functional materials to more than 50% by 2030 while reducing jewelry's share to a maximum of 30%2

2

.

The economics favor this transition. Industrial synthetic diamonds can generate gross margins of about 50%, compared with roughly 30% to 40% for gem-grade diamonds. Meanwhile, rising Chinese production has driven down jewelry diamond costs, forcing producers toward new lucrative industrial applications1

1

. The Shanghai Diamond Exchange exported $210 million of lab-grown diamonds in the first half of 2026, up 65.3% year-over-year1

1

.

Henan Liliang Diamond plans to redirect 1 billion yuan ($149 million) from gem-diamond production to a functional-diamond project1

1

2

2

. This shift could give China's diamond industry greater strategic significance in the US-China tech rivalry. If synthetic diamonds for chip cooling become widely adopted, China's production dominance could emerge as another supply-chain vulnerability for the US2

2

.

Major Tech Companies Explore Synthetic Diamonds for Chip Cooling

Chinese media report that TSMC and Huawei are exploring synthetic diamonds for chip cooling applications1

1

2

2

. Lenovo claims to employ a diamond-copper cooling material in a laptop1

1

. In June, Intel CEO Lip-Bu Tan revealed he personally invested in Diamond Foundry, a lab-grown diamond maker developing chip-grade diamond wafers2

2

.

Diamond heat spreaders could compete with thermal management solutions from established players including Germany's Henkel, US chemical firm Dow, and Japan's Shin-Etsu Chemical. The scope and potential in technology and industrial applications could significantly exceed the retail diamond jewelry business, which itself approximates $100 billion annually, according to independent diamond consultant Robert Bouquet2

2

.

Diamond Wafer Production Expands Globally

Beyond China, diamond-enabled products are gaining traction. In June, De Beers' synthetic-diamond business Element Six and Japan's Orbray produced 3-inch single-crystal diamond wafers and prepared 2-inch wafers for production in Oregon2

2

. The Spanish government is investing €753 million ($868 million) in a Diamond Foundry plant in Trujillo that will manufacture synthetic diamond wafers. If completed, it would be Europe's first large-scale producer of diamond substrates for semiconductor manufacturing2

2

.

While thermal management represents a nearer-term opportunity, using diamonds as a semiconductor material remains further from widespread commercial adoption. Chip applications require much higher purity and tighter manufacturing standards than diamonds used in cutting and drilling tools. Yet interest from major technology companies signals that chip cooling could become a significant demand source as AI computing generates mounting heat challenges2

2

.