AI gives diamond new shine

IN an age being reshaped by artificial intelligence (AI), few figures command the spotlight like Jensen Huang, Nvidia’s founder, whose speeches, trips and even the fortunes of his suppliers are closely watched by the world.

During the AI exhibition Computex 2026, held recently in Taipei, Taiwan, MSI – an electronics company that has worked with Nvidia for over two decades – unveiled a new thermal solution for Nvidia’s next-generation consumer graphics processing units (GPUs), featuring a diamond-copper composite baseplate and diamond-composite thermal pads.

At the Consumer Electronics Show held in Las Vegas at the beginning of the year, Nvidia announced that its next-generation Vera Rubin architecture GPUs will fully adopt a solution combining diamond-copper composite thermal management and 45°C direct-to-chip liquid cooling.

At almost the same time, a picture went viral on Chinese social media: Huang met with Zhu Yanhui, founder of Chaoying Diamond Technology.

Yes, a key word has surfaced: diamond.

This does not mean that the industry guru, known for his fashion sense and epitomised by his love of leather jackets, is venturing into another sector.

Rather, it means that diamond, or more precisely, lab-grown diamond, plays a crucial role in the AI race to cool down chips.

According to Lu Pei, chief machinery industry analyst at the research institute of China Galaxy Securities, diamond is no longer an option, but a necessity for cooling in scenarios where single-chip power consumption exceeds 1,400 watts (W).

Ultimate thermal solution

Nvidia’s Vera Rubin AI chip is reported to consume a staggering 2,300W – equivalent to a household induction cooker running at full power, all packed into a chip the size of a fingernail.

In that situation, the chip’s core temperature hits 110°C within minutes, forcing it to slow down and crippling AI training performance.

Traditional copper and aluminium heat spreaders are insufficient for heat dissipation, and liquid cooling alone is inadequate.

Diamond has become the ultimate thermal solution.

With the highest thermal conductivity of any naturally occurring material, diamond’s room-temperature thermal conductivity is 5.5 times that of copper and 11 times that of aluminium.

“Capable of quickly removing heat, it also provides great electrical insulation and expands at a rate similar to silicon wafers, which helps stop chips from breaking when temperatures change suddenly,” says Lu.

According to Pan Helin, a member of the expert committee on information and communication economy of the Industry and Information Technology Ministry, diamond-based chip thermal management is primarily suited to high-end chips, while the most critical application field for high-end chips is the AI computing power sector.

Nvidia is not the only industry giant turning to diamond as a solution.

In March, an undisclosed US buyer placed a US$300mil order for AMD Instinct MI350X GPUs cooled with lab-grown diamond, signalling a breakthrough approach to tackling AI data centres’ massive energy consumption.

Emotional value

Another vibrant story is being told in the Chinese stock market.

The A-share lab-grown diamond sector surged more than 71.4% during the first half of this year, while the benchmark Shanghai Composite Index climbed only 3.16% during the same period.

The logic behind the market rally is simple.

On the materials side, China accounts for 95% of global synthetic diamond production, according to the Superhard Materials Branch of the China Machine Tool & Tool Builders’ Association.

Product-wise, China produced 63% of the world’s 40-million-carat lab-grown diamonds last year, overtaking all other countries, according to an industry report released by the Zhongyuan Jewellery Innovation Research Institute in December.

China’s first synthetic diamond was successfully created in Zhengzhou, Henan province, in 1963. According to the Shanghai Gold Jade Trade Association, the industry underwent rapid development between 2010 and 2022 thanks to the maturity of key technologies.

However, overcapacity led to a sharp price collapse after 2023, with rough lab-grown diamond prices plunging to US$15 per carat in 2024 from US$100 per carat in 2022.

However, a silver lining has emerged for the Chinese retail sector over the past few years.

In the first half of 2023, CHJ Jewellery teamed up with Henan Liliang Diamond to launch the lab-grown diamond retail brand Cevol.

Li Mengjiao, a salesperson at a Cevol store in downtown Shanghai, says that younger people in their 20s and 30s make up the majority of their clients as they attach greater importance to value for money.

“People can get the same emotional value by paying one-tenth of the money for a real diamond.

“It can be said that we can achieve diamond freedom effortlessly now,” she says.

Lab-grown diamond brands started opening offline stores in the Shanghai Diamond Exchange building in late 2021.

Tang Nina, 31 and a bride-to-be, learnt of this development from social media and became a customer of one of the brands in early July.

“The physical nature of a natural diamond and a lab-grown diamond is the same.

“But the prices vary greatly.

“A one-carat diamond ring is usually priced at more than 100,000 yuan (US$14,770), but a lab-grown loose diamond costs less than 2,000 yuan.

“By adding the ring setting or other exquisite decorations, the total cost will be no more than 10,000 yuan.

“We could use the rest of the budget for overseas travel or invest in gold – the price of which has gone down lately,” she says.

Tang’s down-to-earth attitude towards such luxuries echoes the findings of Nicolas Willemot, global head of consumer products practice at consulting firm Bain & Co, who says that Chinese consumers are more rational and selective about the real benefits of products, whether emotional or functional.

The Chinese consumer market has become more fragmented, meaning brands have either to provide greater added value or become more price-competitive.

But it is the AI boom that is really giving the Chinese lab-grown diamond industry a second growth curve.

According to Sui Dong, a researcher at private market tracker Simuwang, the growth logic for the industry has shifted from the consumer side to the advanced materials sector, with the core growth driver becoming the revaluation of AI computing power.

As Chinese synthetic diamond companies are now becoming more deeply integrated into the AI chip supply chain, global demand for China’s synthetic diamond industry will rise accordingly.

Data from the General Administration of Customs show that China’s lab-grown diamond exports spiked 135.87% year-on-year in May thanks to continued rising demand from overseas.

Therefore, leading Chinese lab-grown diamond companies are adjusting their business portfolios to ride the AI wave.

Investments for growthIn early June, Liliang Diamond announced a plan to reallocate the 1.03 billion yuan of funds it had previously raised – originally intended for expanding its lab-grown diamond factory – to a new synthetic diamond functional materials production, research and development project.

Through renovations to its existing facilities, the company aims to accelerate its entry into high-end sectors, including AI chip thermal management, optical materials and acoustic diaphragms. The new project has a three-year construction cycle, according to the company’s announcement.

The company already has heat dissipation-related products in place and has achieved small-volume production.

Through a partnership with a Taiwanese company, Liliang Diamond handles technology and production, while its partner is responsible for off-take sales.

Despite three consecutive years of revenue decline as of 2025, the company’s share price doubled within two months in the second quarter of this year, pushing its market capitalisation to a peak of more than 23 billion yuan.

Henan-based Huifeng Diamond started to tap into the diamond thermal management sector in 2022, according to the company’s rotating general manager Bao Siwei.

Last year, the company initiated a new strategy to further develop the two core technologies of high pressure, high temperature and chemical vapour deposition (CVD), which are the two key technologies in diamond thermal management.

In December, Huifeng announced plans to invest one billion yuan to build a CVD diamond project in Baotou, Inner Mongolia autonomous region.

While construction began on May 28, the project quickly commenced production on July 1.

In late November, Huifeng invested 30.62 million yuan in a private equity fund, through which it acquired a stake in xFusion International, directly entering the thermal management application segment for AI computing chips.

“This round of investment and application of diamond in the thermal management sector should be carried out in a measured and targeted manner, focusing on high-end and mission-critical needs, so as to narrow the gap between China and leading markets,” says Bao.

Creating a value hub

Experts from China Securities say that commercial orders for diamond-based thermal management solutions are expected to materialise in the second half of the year, with widespread adoption in AI servers and high-end consumer electronics.

Investment confidence across the industry chain will be boosted, they add.

According to a research report by Zhongtai Securities, the global market for diamond heat spreaders used in high-end AI chips is projected to reach 8.7 billion yuan this year and surge to 59.2 billion yuan by 2030, representing a compound annual growth rate of more than 50%.

The government has already noticed the industry’s growth potential.

In April, the Industry and Information Technology Ministry officially included functional diamonds in the key catalogue of strategic new materials for the 15th Five-Year Plan (2026 to 2030), incorporating the high-end and functional development of lab-grown diamonds into the national industrial support system.

Likewise, the municipal government of Zhengzhou expressed strong support for the construction of high-end diamond industrial parks during the 15th Five-Year Plan period, aiming to build the city into the country’s hub for lab-grown diamonds.

But, of course, the path to growth is never without challenges, especially as the Chinese lab-grown diamond industry has already encountered the problem of overcapacity once.

Ye Zhibin, president of the Gems and Jewellery Trade Association of China, says the country’s lab-grown diamond industry is large, but not strong enough.

Companies’ production covers a wide range of sub-sectors, yet their capabilities are not sufficiently refined.

This has led to Chinese lab-grown diamond companies capturing only 15% of the profits in the finished product segment globally, even though China accounts for the majority of the world’s rough lab-grown diamond production.

The industry must strengthen itself across the technology chain, the value chain and the brand chain so that China can evolve from a “world factory” into a “value hub” for lab-grown diamonds, he says.

Ge Shaobo, an associate professor at the Institute for Interdisciplinary and Innovation Research at Xi’an Technological University, says that China’s production capacity and cost advantages in synthetic diamonds provide a solijd foundation for entering the AI thermal management supply chain.

However, the key to the next phase of development is no longer concentrating on large output but rather applying the technology in high-end scenarios, passing customer validation, securing stable orders and competing in the global AI hardware supply chain.

“If Chinese companies can translate their scale advantages into a technological edge, application know-how and supply chain synergy, they will have the opportunity to evolve from traditional synthetic diamond manufacturers into key players in the high-end thermal management materials market of the AI era,” he says. — Xinhua/China Daily/ANN