2026 Industry Outlook: Diamond Semiconductors, Thermal Management, And Diamond Tools & Abrasives

In 2025, driven by the dual forces of supportive government policies and demand from emerging industries, listed companies within the diamond sector accelerated their focus on core application tracks. This resulted in a concentrated strategic layout across three major domains: semiconductor materials, high-efficiency thermal management, and high-end precision grinding and processing. From breakthroughs in large-format semiconductor substrates to chip-level compatibility in thermal management materials-and from traditional industrial grinding to precision processing in high-end manufacturing-leading enterprises have, through their technological breakthroughs and capacity planning, clearly delineated a path for industrial upgrading. Based on this foundation, the diamond industry is poised to enter a "deepening phase of critical breakthroughs in core domains" in 2026, wherein the technological industrialization and market scaling of these three key tracks will serve as the primary engines driving the industry's high-quality development.

1. Core Strategic Layouts by Listed Companies in 2025 Lay the Industry's Foundation

In 2025, listed diamond companies executed targeted strategic layouts centered on the three core domains of semiconductors, thermal management, and grinding/processing, thereby solidifying the foundation for industrial breakthroughs anticipated in 2026. In the semiconductor sector, the 12-inch diamond wafer substrates jointly developed by Sifangda and SMIC entered the pilot production phase. Meanwhile, Huanghe Whirlwind successfully achieved mass production of ultra-thin (5–30 μm) 6-to-8-inch polycrystalline diamond wafer heat sink materials, with key performance metrics meeting client specifications. Relying on the MPCVD technical route, Sinomach Precision continued its intensive R&D efforts on semiconductor-grade diamond materials; the company's revenue from functional applications in this field is projected to exceed 10 million RMB in 2025. In the thermal management sector, the high-power semiconductor heat sinks developed by Liliang Diamond successfully passed laboratory testing by NVIDIA. Additionally, Hengsheng Energy signed a testing agreement for its thermal management products with a major chip manufacturer, while the Ningbo Institute of Materials Technology & Engineering successfully fabricated 4-inch ultra-thin, ultra-flat self-supporting diamond films-achieving a warpage tolerance of less than 10 μm-thereby resolving a critical bottleneck in the chip bonding process. In the field of grinding and machining, domestically produced precision diamond tools have achieved breakthroughs in applications such as photovoltaic silicon wafer slicing and the ultra-precision processing of silicon carbide (SiC) wafers. Products such as micron-grade single-crystal diamonds and thinning grinding wheels-manufactured by leading enterprises like Huanghe Whirlwind and Huifeng Diamond-have reached advanced international standards and are now widely utilized in high-end manufacturing sectors, including aerospace and electronic information.

Regarding production capacity and industrial chain layout, leading enterprises are accelerating the development of large-scale support capabilities across three key sectors. Li-Power Diamond, for instance, plans to install an additional 400 MPCVD units; this expansion is projected to double its heat sink production capacity to 1 million units per year by 2026. Meanwhile, Sinomach Precision leverages the low-cost electricity resources available at its Hami Industrial Park in Xinjiang to reduce the manufacturing costs of its MPCVD-produced products, thereby accelerating the industrialization of semiconductor and thermal management materials. The Xinjiang region has emerged as a new growth pole for the semiconductor-grade diamond industry, witnessing the concentrated launch of numerous projects-such as those by Runjing Technology and Tanji Xincai-with a planned production capacity exceeding 1 billion carats. These initiatives are primarily focused on overcoming technical challenges related to 8-inch single-crystal diamond substrates. Industrial chain collaboration continues to deepen; for example, Huanghe Whirlwind has partnered with Xiamen University to establish a joint laboratory for integrated circuit thermal management, focusing on solving heat dissipation challenges for 5G/6G and AI chips. Additionally, Huawei and the Harbin Institute of Technology (HIT) have jointly developed hybrid bonding technology for silicon-on-diamond 3D integrated chips, thereby expanding the frontiers of semiconductor applications. In terms of global market strategy, Huanghe Whirlwind has successfully exported entire production lines of its HPHT presses, while the export volume of its high-end grinding and machining tools continues to rise steadily.

 

2. Key Outlook for the Development of the Three Core Diamond Sectors in 2026

2.1 Diamond Semiconductors:

Breaking Through Technical Bottlenecks and Approaching the Industrialization Tipping Point. 2026 is poised to be a pivotal year for the industrialization of diamond semiconductors, driven by a dual-pronged approach involving both the resolution of core technical challenges and the successful implementation of applications in real-world scenarios. In the realm of material preparation, the development of large-sized, low-defect substrates has become a primary focus of research and development. Huanghe Whirlwind is expected to achieve a technical breakthrough in the preparation of 12-inch polycrystalline diamond wafers for use as heat sink materials, while companies such as Xinjiang Tanji Xincai are concentrating their efforts on developing 8-inch single-crystal substrates, with the specific objective of significantly reducing dislocation density from its current magnitude of 10⁷ cm⁻². Significant progress has been achieved in doping technology; the n-channel diamond MOSFET technology developed by Japan's NIMS has laid the foundation for the realization of CMOS integrated circuits. Meanwhile, a high-efficiency bulk doping activation technology-developed through a collaborative effort between domestic universities and enterprises-holds the promise of solving the long-standing challenge of fabricating high-performance p-n junctions at room temperature.

Regarding application scenarios, devices designed for extreme environments are expected to be the first to achieve mass production breakthroughs. Japan's Okuma Corporation plans to commence production of diamond semiconductor devices in fiscal year 2026, with initial applications targeting robots used for nuclear waste processing at the Fukushima nuclear power plant; leveraging their high-temperature resistance and radiation-hardened properties, these devices will eliminate the need for heavy lead shielding and cooling systems. Domestic enterprises, conversely, are focusing on sectors such as 5G/6G communications and satellite communications. The commercialization of 2-inch single-crystal diamond substrates-a feat achieved by Xi'an Jiaotong University-is set to further expand the scope of applications, providing critical material support to enterprises engaged in high-frequency, high-power detection technologies. In terms of cost control, the Xinjiang region is leveraging its energy advantages to drive scaled-up production; it is anticipated that 4-inch diamond substrates will soon achieve mass production, thereby gradually narrowing the cost gap relative to silicon-based materials and facilitating the transition of semiconductor applications from the military-industrial sector to the civilian market.

 

2.2 Diamond Heat Dissipation:

Driven by Computing Demand-Accelerating the Shift from "Optional" to "Essential." The demand for high heat flux density dissipation-particularly in areas such as AI chips, 5G/6G base stations, and new energy vehicle inverters-is poised to drive a breakthrough in the scaled application of diamond heat dissipation materials by 2026, elevating their market status from a mere "option" to an "essential" requirement. On the technological front, fabrication techniques for ultra-thin, ultra-flat diamond films continue to mature; the 4-inch film technology developed by the Ningbo Institute of Materials Technology and Engineering is set to be upgraded to 6-inch and larger formats, offering heat dissipation solutions that are better suited for 3D packaging and heterogeneous integration. Furthermore, the technical challenges associated with surface metallization have been largely resolved; diamond-based carrier board products-jointly developed by Huanghe Whirlwind and Bozhi Jinduan-utilize optimized surface modification processes to enhance both thermal conductivity and reliability, thereby effectively meeting the packaging requirements of high-power devices.

The market size is poised to experience explosive growth. Estimates indicate that the diamond heat dissipation market is projected to skyrocket from $50 million in 2025 (representing a penetration rate of less than 0.1%) to $15.2 billion within the next few years (reaching a penetration rate of approximately 10%), with a projected compound annual growth rate of 214% in 2026. In terms of corporate competition, results from testing on heat dissipation products for the civilian sector-conducted by Sinomach Precision-are expected in 2026, marking a significant transition from non-civilian to civilian applications. Meanwhile, the ramping up of heat sink production capacity by companies such as LiLiang Diamond and Hengsheng Energy is poised to meet the massive order demands of industry leaders like NVIDIA and top-tier domestic chip manufacturers. Application scenarios are expanding further; beyond high-end chips, heat dissipation requirements in sectors such as data centers and optical communication lasers are emerging as new growth drivers, fostering a diversified market landscape for diamond-based thermal management materials.

2.3 Diamond Grinding and Processing:

Upgrading High-End Manufacturing to Solidify the Industry's Foundation. As a traditional area of ​​strength within the diamond industry, the grinding and processing sector is expected in 2026 to leverage upgrades in high-end manufacturing to achieve simultaneous improvements in both product quality and application scope, transitioning from being merely the "teeth of industry" to becoming "core consumables for precision machining." Demand from high-end manufacturing sectors-such as photovoltaics and semiconductors-is becoming the primary growth engine. Products such as diamond thinning wheels and precision grinding discs are achieving full-scale substitution in the ultra-precision surface processing of silicon carbide (SiC) wafers; indeed, products from domestic enterprises have already reached advanced international standards across key metrics such as processing efficiency, cutting precision, and service life. Demand within the new energy vehicle (NEV) supply chain continues to surge; the market size for nano-diamond abrasives used in processing power battery electrode sheets is projected to triple, while the gross margin for specialized drill bits used in deep-sea and shale gas exploration is expected to remain above 45%.

Technological upgrades are driving the optimization of product structures, with the proportion of micron- and nano-scale single-crystal diamond products continuing to rise. R&D into functional grinding materials is accelerating, and customized products-tailored to suit diverse materials and varying precision requirements-are becoming a core competitive advantage for enterprises. The industry landscape is characterized by "leader-driven growth and niche-market breakthroughs": industry leaders such as Huanghe Whirlwind and Huifeng Diamond dominate the mid-to-high-end market segments by leveraging their comprehensive advantages across the entire supply chain, while small and medium-sized enterprises (SMEs) engage in differentiated competition by focusing on niche tracks, such as the precision machining of aerospace components and the grinding of medical equipment. Global market expansion continues to deepen; leveraging their advantages in both cost and quality, domestic diamond grinding tools are further penetrating overseas markets-including Southeast Asia, Europe, and the Americas-with the annual growth rate of export volume consistently exceeding 20%.

 

2.4 Shared Challenges and Collaborative Opportunities:

Three Major Sectors Jointly Build an Ecosystem for Industrial Upgrading. In 2026, these three core sectors will face common technological and market challenges: First, the reliance on high-end equipment and raw materials has not yet been fully resolved; specifically, key segments-such as core components for high-end MPCVD equipment and high-purity carbon sources-remain dependent on imports. Second, the standardization system remains incomplete, with performance testing and application specifications for semiconductor diamond materials and high-end thermal management products still awaiting unification. Third, the difficulty small and medium-sized enterprises (SMEs) face in securing financing remains a prominent issue, constraining their capacity for technological R&D and production expansion. Concurrently, there is a recognized lack of technological synergy across these sectors, making it difficult to rapidly translate achievements in materials preparation technology from one domain to another.
Policy support and industrial collaboration will provide robust backing for breakthroughs across these three sectors. The national "15th Five-Year Plan" places a strategic focus on the new materials industry, with dedicated funds earmarked to prioritize R&D for critical technologies such as semiconductor diamond substrates and high-end thermal management materials. Furthermore, environmental protection policies are compelling the grinding and processing sector to undergo a green transition; specifically, the shift from resin-bonded abrasives to metal-bonded alternatives is expected to generate a 20 billion RMB market for equipment retrofitting. The collaborative industrial ecosystem is accelerating its formation; joint mechanisms involving industry, academia, and research institutions are being further refined, while upstream and downstream enterprises are establishing joint laboratories to drive synergistic technological breakthroughs across materials preparation, device processing, and application validation stages. Innovations in supply chain finance, coupled with improvements in specialized logistics services, will help alleviate the financing difficulties faced by SMEs and ensure the secure and efficient circulation of products across these three sectors.

 

3. Conclusion

The strategic and precise positioning undertaken by listed companies across the three major sectors-semiconductor diamonds, thermal management, and grinding/processing-in 2025 has laid a solid foundation for industrial upgrading in 2026. Looking ahead, these three core sectors will each pursue distinct primary pathways-technological breakthroughs, market expansion, and quality enhancement-to drive the diamond industry's transformation from mere scale expansion toward high-quality development. Despite facing shared technological bottlenecks and competitive pressures, domestic diamond enterprises-bolstered by policy dividends, demand from emerging industries, and the empowering synergy of the industrial ecosystem-are poised to secure more central positions within the global supply chains for semiconductor materials, high-end thermal management, and precision processing. Together, these three sectors will constitute the core pillars supporting the high-quality development of the entire industry.