China’s synthetic diamond producers are redirecting production from retail jewelry toward semiconductor manufacturing, AI data centers, and thermal-management components. Driven by falling gem prices and intense competition, the sector aims to supply high-purity materials for advanced computing as global demand for data center capacity is fueled by AI.
Feng Canjun Shifts Factory Output From Gems to Industrial Materials
Gross profit margins for industrial diamonds hover around 50%, compared to 30% to 40% for gem-grade stones. To capture higher returns, Feng plans to restructure his production targets over the next several years.
Around 70% of the two million carats of lab-grown diamonds produced annually at Feng Canjun’s factory in Zhengzhou, China currently go into retail jewelry.
I am looking to raise the share of my products used in functional materials to more than 50% by 2030 while reducing the share going to the jewellery sector to a maximum of 30%
Feng Canjun, entrepreneur
The International Energy Agency projected in a 2025 report that data center electricity consumption will more than double by 2030 to reach approximately 945 terawatt-hours—roughly matching Japan’s annual power consumption—with artificial intelligence acting as the primary driver.
China's lab-grown diamond makers target AI, chip sectors for next wave of growth https://t.co/IIJeGbTMW2
Feng’s Jiaruifu factory is one of hundreds of lab-grown producers clustered in the central province of Henan. Lab-grown diamonds are made in machines that replicate high-temperature, high-pressure subterranean conditions.
AI Infrastructure Drives Demand for Diamond Thermal Management
This trend aligns with the surge in demand for data center capacity fueled by AI.
Thermal management represents a commercial opportunity. Huawei, TSMC, and Lenovo are exploring or using synthetic diamonds for chip cooling applications.
If widely adopted, diamond heat spreaders could compete directly with thermal-management products sold by established firms like Henkel, Dow, and Shin-Etsu.
China Dominates Global Supply of Functional Diamond Substrates
De Beers subsidiary Element Six and Japan’s Orbray produced 3-inch single-crystal diamond wafers while readying 2-inch substrates for production in Oregon. The Spanish government’s Diamond Foundry plant in Trujillo is a project expected to become Europe’s first large-scale producer of diamond substrates if completed.
Because China accounts for roughly half of global supply—with Henan province alone representing 80% of the country’s output—analysts note that its dominance in functional diamond substrates could introduce new supply-chain dynamics. If synthetic diamonds are widely adopted in semiconductors and AI infrastructure, China’s dominant production position could become a supply-chain vulnerability for the United States, impacting thermal management and chip performance.
The broader implication is that synthetic diamonds could increasingly become part of the strategic trade-policy conversation surrounding semiconductors, rare earths and advanced manufacturing
Manan Goenka, engagement manager at Ken Research
China added more synthetic diamond products to its list in 2025. Implementation of those newer controls was postponed for one year following a US-China agreement reached in October.