are diamond tools worth the investment

are diamond tools worth the investment

 

Conclusion:

• In the medium to long term, it is worth planning, but by 2025, we have entered the stage of "high prosperity+high competition". We must choose segmentation, technology, and customers, otherwise it is easy to become a red ocean business that only increases revenue but not profits.

 

1. Market space:

still expanding, but the growth rate is slowing down
The global scale is expected to reach approximately $10 billion in 2023, $13.4 billion in 2025, and $57.6 billion in 2032, with a compound annual growth rate of around 6.3%; The Chinese market accounts for over 20% of the global market, with a growth rate slightly higher than the global average.

 

The increment mainly comes from three major tracks:

• Diamond wire saw for silicon wafer/sapphire cutting (photovoltaic+semiconductor);
• Aluminum PCD cutting tools brought about by the lightweighting of new energy vehicles;
• CVD diamond heat sink for 5G/AI high-power chip heat dissipation

 

 2. Profit model: The technical threshold determines the gross profit margin

• Ordinary construction saw blades/grinding discs: low threshold, intense price war, gross profit margin of 15-25%;
• Precision PCD cutting tools, electroplated diamond micro drills: gross profit margin of 35-50%, long customer certification cycle, high order stickiness;
• Single crystal diamond substrates over 2 inches (semiconductor grade): Technology is scarce, with a gross profit of up to 60%, but still in the research and development - small batch stage.

 

 

3. Competitive landscape: high-end "import substitution", mid to low end "internalization"

• 90% of the high-end market is occupied by foreign companies such as Sandvik, Sumitomo, and Element Six; Only a few domestic companies such as Wald, Sifangda, and Yellow River Cyclone have the ability to supply in bulk.
• The mid to low end production capacity will rapidly expand from 2022 to 2024, and the unit price of diamond wire saws has dropped from about 40 yuan/km in 2020 to less than 15 yuan/km in 2024, accelerating the reshuffle of the industry 

 

4. Policies and Risks

• Positive news: The country has included "superhard materials and products" in the list of key new materials, and export tax rebates and scientific research subsidies will continue; Local investment projects generally offer equipment subsidies of 10-30%.
• risk
• Technical route switching (such as replacing wire saws with laser cutting);
• The large-scale production of silicon wafers has led to a decrease in wire saw unit consumption;
• If the price of synthetic diamond raw stone continues to decline, it may squeeze the profit of the cutting tool link 

 

5. Investment Window Suggestions (2025-2027)

subdivision direction	customer pain points	Entry threshold	Valuation heat	Suggested action
Photovoltaic/Semiconductor Wire Saw	Cost reduction+thinning	Moderate difficulty	high popularity	Only invest in teams with mass production capabilities of ≥ 50 μ m or below
PCD cutting tools for new energy vehicles	Efficient processing of aluminum parts	High difficulty	Moderate attention	Bind host factory Tier1, follow Wald/Sifangda industry chain
Single crystal diamond heat sink	High power chip heat dissipation	extremely difficult	Low attention	Tracking CVD equipment+substrate integration project, suitable for early VC
Architectural/Stone Saw Blades	Price Red Sea	low difficulty	Low attention	Abandoning or only accepting cash flow from mergers and acquisitions of factories

 

 

One sentence operation: "It's better to invest in expensive high-end production capacity than in cheap red ocean production capacity

 

Our company has been engaged in diamond tools for the construction stone industry for nineteen years. Whether it's the blue ocean or the red ocean, we always adhere to this industry.