AI adds sparkle to synthetic diamond sector

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 vapor deposition, which are two key technologies in diamond thermal management.

In December, Huifeng announced plans to invest 1 billion yuan to build a CVD diamond project in Baotou of the Inner Mongolia autonomous region. While construction broke ground 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 scenario 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," said Bao.

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

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

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 by 2030, representing a compound annual growth rate of over 50 percent.

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

In April, the Ministry of Industry and Information Technology officially included functional diamonds in the key catalog of strategic new materials for the 15th Five-Year Plan (2026-30) period, incorporating the high-end and functional development of lab-grown diamond into the national-level industrial support system.

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

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

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

Companies' production covers a wide range of sub-sectors, yet the skills are not refined. This has led to Chinese lab-grown companies capturing only 15 percent of the profits in the finished product segment globally, while China accounts for the majority of the world's rough lab-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 diamond, he said.

Ge Shaobo, an associate professor of the institute for interdisciplinary and innovation research at Xi'an Technological University, said that China's production capacity and cost advantages in synthetic diamond provide a solid foundation for entering the AI thermal management supply chain.

However, the key to the next phase of development is no longer about concentrating on a large output, but rather applying 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 technological edge, application knowhow 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 said.