Zhengzhou: Chinese lab-grown diamond manufacturers are expanding their focus beyond jewellery into advanced industrial applications, particularly AI infrastructure, semiconductor technology and thermal management. The shift comes as declining gemstone prices and increasing competition encourage producers to explore higher-value uses for synthetic diamonds, positioning the material within the growing technology and electronics sectors.
China accounts for approximately half of global lab-grown diamond supply, making developments within its manufacturing industry particularly significant for the international diamond market. While jewellery remains an important application, producers are increasingly evaluating functional diamonds for their potential in electronics, heat management and other technology-intensive industries.
The transition is reflected in the strategy of Feng Canjun, whose Jiaruifu factory produces approximately two million carats annually. Around 70 per cent of its current output is directed towards jewellery applications. However, Feng plans to increase the proportion allocated to functional materials to more than 50 per cent by 2030, while reducing jewellery's share to approximately 30 per cent.
The planned shift is driven partly by differences in profitability. According to Feng, gross margins for gem-grade diamonds range between 30 and 40 per cent, compared with approximately 50 per cent for industrial diamonds. These figures highlight the commercial appeal of moving towards specialised applications rather than relying primarily on gemstone production volumes.
One of the most promising areas is thermal management for AI processors and semiconductor devices. As computing systems become more powerful, managing the heat generated by advanced chips is becoming an increasingly important engineering challenge. Diamond's exceptional thermal conductivity makes it a potential material for improving heat dissipation in high-performance electronic components.
Manufacturers are particularly interested in diamond-based cooling materials, which could offer nearer-term commercial opportunities compared with using diamond itself as a semiconductor. Semiconductor-grade diamond requires significantly higher material purity, precise defect control and more demanding manufacturing processes, creating technical barriers to large-scale adoption.
Commercial interest in diamond-based cooling is beginning to emerge. Lenovo has introduced a consumer laptop in China incorporating a diamond-copper cooling material, according to the company, demonstrating how synthetic diamond technology is being explored beyond conventional industrial applications.
The shift is also influencing investment decisions among Chinese diamond producers. Henan Liliang Diamond plans to redirect approximately one billion yuan previously allocated to gem-grade production expansion towards a functional-diamond project. The proposed investment reflects growing interest in advanced materials as a potential source of future revenue.
However, the transition presents significant manufacturing and commercial challenges. Producing diamonds for electronic and thermal applications requires different technical specifications from those used in jewellery, including greater consistency in material properties, tighter quality controls and application-specific performance standards.
Commercial adoption will also depend on manufacturing costs, integration with existing semiconductor technologies and the ability to produce functional diamond materials at scale. The possibility of excess production capacity remains another consideration as more manufacturers explore the same industrial opportunities.
For the global jewellery industry, the development signals a potential change in how synthetic diamond production capacity is allocated. As Chinese producers diversify into functional materials, their investment priorities may increasingly extend beyond jewellery-grade output towards technology-driven applications.
The emerging focus on AI cooling and semiconductor technology illustrates the expanding industrial relevance of lab-grown diamonds, with manufacturers seeking to leverage their production expertise in markets where material performance, rather than gemstone appearance, determines commercial value.
