Lab-grown Diamonds Are Not Just A Jewelry Substitute For Natural Diamonds, But Also A Functional Material

Lab-grown diamonds are not merely affordable alternatives to jewelry-grade diamonds; they are, in fact, functional diamond materials.

 

Many assume the narrative surrounding lab-grown diamonds is simply that "natural diamonds are too expensive, so man-made ones serve as a cheaper substitute." However, viewing them solely through this lens underestimates the true industrial transformation at play.

(Jewelry Diamond, we also call it as white diamond)

 

While lab-grown diamonds appear to be diamonds on the surface, their underlying nature involves carbon materials, equipment manufacturing, and high-end applications. The industry's evolution moves from an initial focus on engagement rings and jewelry to a phase of price correction, potentially leading to a third stage characterized by applications in semiconductor thermal management, power devices, quantum sensing, and superhard materials.

 

In short: lab-grown diamonds are transitioning from "cheap diamonds" to "functional diamond materials."

 

  0 Executive Summary  

Lab-grown diamonds are synthetic diamonds produced via HPHT (High-Pressure High-Temperature) or CVD (Chemical Vapor Deposition) technologies; their chemical composition and crystal structure closely resemble those of natural diamonds. In recent years, the market has primarily viewed them as affordable alternatives for jewelry. However, as supply in the jewelry sector expands and prices decline, the industry's underlying logic is shifting.

 

The true focus should be on the material properties of diamond itself: extreme hardness, high thermal conductivity, a wide bandgap, and high breakdown field strength. These characteristics open doors to applications in semiconductor thermal management, power devices, optical windows, quantum sensing, and superhard cutting tools.

 

China holds significant advantages in HPHT six-sided anvil presses, industrial diamond production, and the upstream rough diamond segment. Industry data indicates that China accounts for approximately 75% of global lab-grown diamond production capacity and possesses over 90% of the world's capacity for six-sided anvil presses. Nevertheless, weaknesses remain in areas such as high-end CVD large single-crystal production, global brand channels, and semiconductor-grade customer certification.

 

  I. First, a key distinction: lab-grown diamonds are not diamond simulants  

Lab-grown diamonds are neither cubic zirconia nor moissanite.

 

While cubic zirconia and moissanite are essentially diamond simulants, lab-grown diamonds are, in essence, actual diamonds. Composed primarily of carbon, they exhibit crystal structures, hardness levels, and refractive indices that closely match those of natural diamonds.

 

The difference lies in:

dimension	lab-grown diamond	Natural diamonds
formation method	industrial synthesis	geological formation
supply elasticity	scalable	constrained by mines
pricing logic	cost + brand + channel	scarcity + brand
The industry logic spans	Jewelry+Materials	Luxury consumption

 

(Industrial artificial diamond, we also call it as yellow diamond)

 

Consequently, the core tension facing lab-grown diamonds is clear: on one hand, they resemble consumer jewelry, influenced by branding, the wedding market, and consumer price perceptions; on the other, they function like advanced materials, driven by equipment, manufacturing processes, yield rates, and customer certification.

 

 

  II. HPHT vs. CVD: Two Technical Routes, Two Distinct Logics.  

There are two primary production routes for lab-grown diamonds: HPHT and CVD.

 

HPHT (High-Pressure High-Temperature) simulates the extreme heat and pressure found deep underground, utilizing cubic presses to grow diamonds. Its advantages-maturity, low cost, and strong scalability-make it better suited for producing rough stones for jewelry and industrial-grade diamonds.

 

CVD (Chemical Vapor Deposition) involves the reaction of gases such as methane and hydrogen to grow carbon atoms layer-by-layer onto a seed crystal.

 

Technical Roadmap	Advantage	More suitable direction
HPHT	Mature, low-cost, and scalable	Jewelry blanks, industrial diamonds
CVD	High purity, large size, sheet-like crystals	Semiconductor heat dissipation, power devices, quantum materials

 

China excels in HPHT technology; industry data indicates that China possesses over 90% of the global production capacity for cubic presses. This explains why most A-share listed lab-grown diamond companies are concentrated within the superhard materials supply chain in Henan Province. However, in the long run, large single-crystal CVD diamonds offer greater potential for "functional diamond" applications.

 

 

  III. Why Jewelry Isn't the Only Answer.  

In recent years, lab-grown diamonds have most commonly been perceived as "affordable alternatives" to natural diamonds. Because natural diamonds are prohibitively expensive, lab-grown diamonds-offering lower prices and a similar appearance-have successfully entered the markets for engagement rings, fashion jewelry, and products targeting younger consumers.

 

The issue, however, is the high supply elasticity within the jewelry sector.

 

Improvements in equipment efficiency, capacity expansion, and process-driven cost reductions continuously drive prices down. Industry data shows that the synthesis cycle for certain CVD processes has been reduced from 300 hours to just 72 hours. While this represents technological progress, for the jewelry market, it also implies a higher risk of oversupply.

 

This presents the first paradox of lab-grown diamonds: lower prices facilitate consumer adoption, yet they also squeeze upstream profit margins.

 

Therefore, if lab-grown diamonds are viewed solely as jewelry, they resemble cyclical commodities more than anything else. True growth potential lies in functional applications.

 

 

  IV. Functional Diamond: The Real New Narrative  

Diamond possesses several "hardcore" material properties-high hardness, high thermal conductivity, a wide bandgap, high breakdown field strength, and excellent optical and quantum characteristics. These traits allow it to transcend jewelry and serve as a high-end industrial material.

 

Application Area	Value Proposition	Key Challenges
Semiconductor Heat Dissipation	Resolves thermal bottlenecks in high-power chips	Cost, packaging compatibility, customer certification
Power Devices	Wide bandgap, high breakdown field strength	Wafer size, defect rates, doping control
Quantum Sensing	NV (Nitrogen-Vacancy) centers for magnetic	temperature sensing | Early stage of industrialization
Optical Windows	High hardness, high transparency, extreme environment resistance	Difficult processing, high cost
Super-hard Tools	Cutting, grinding, drilling	Industrial cyclical fluctuations

 

Industry data indicates that the share of industrial-grade applications rose from 38% in 2024 to 45% in 2025, with the semiconductor sector accounting for 62% of the growth in industrial demand.

 

This explains the market's renewed interest in lab-grown diamonds: the focus has shifted not because jewelry prices have bottomed out, but because the product is potentially transitioning from a "consumer good" to an "advanced material."

 

  V. China's Strengths and Weaknesses  

China's advantages lie primarily in the upstream sector.

1. Strength in HPHT Cubic Presses: China possesses over 90% of the global production capacity for cubic presses (six-sided anvil presses).
2. Strong Industrial Diamond Foundation: Henan Province has established a comprehensive industrial cluster for super-hard materials.
3. Clear A-Share Proxies: Companies such as Zhongbing Red Arrow, Huanghe Whirlwind, Power Diamond, Sifangda, Sinomach-Precision, and Worldia correspond to specific segments of the value chain, including rough diamonds, equipment, super-hard materials, and CVD-related processes.

 

However, the shortcomings are also evident:

• Cutting and polishing centers remain in Surat, India; 
• Global jewelry brands and distribution channels are not entirely controlled by Chinese players;
• High-end CVD large single crystals, semiconductor-grade defect control, and customer certification are still in the catch-up phase;
• Most A-share companies still face jewelry price cycles and fluctuations in industrial diamond prices.

 

Therefore, when evaluating lab-grown diamonds, one cannot simply focus on "China's massive production capacity." High capacity is merely the first step; upgrading the product mix is ​​the key.

 

  VI. How should A-share companies be categorized?  

Lab-grown diamond companies cannot be classified under a single label.

hierarchy(level)	Representative direction	key observation
Rough & Industrial Diamonds	e.g., Zhongbing Red Arrow, Huanghe Whirlwind, Power Diamond	monitor carat prices, capacity utilization, and gross margins
Superhard Material Tools	e.g., Sifangda	monitor industrial demand and product mix
Equipment & Process	e.g., Sinomach-Precision, Worldia	monitor orders for cubic presses and MPCVD equipment
CVD High-End Advancement	monitor CVD large single crystals, heat sink	sampling, certification, and customer orders
Jewelry Channels	e.g., Chow Tai Fook, CHJ	monitor consumer mindset, new product launches, and pricing structures

 

In the short term, the market may trade on the stabilization of jewelry prices and industry consolidation; in the medium term, on equipment orders and CVD process advancements; and in the long term, on whether functional diamonds can enter semiconductor and high-end industrial supply chains.

 

  VII. Which signals are worth tracking continuously?  

I would focus on these categories:

1. Lab-grown diamond rough prices:To gauge if supply and demand at the jewelry level have bottomed out.
2. Changes in company gross margins: To assess if falling prices are still eroding profits.
3. New HPHT/CVD capacity: To evaluate supply pressure.
4. CVD large single crystal size and yield: To track progress in high-end capabilities.
5. Semiconductor heat sink sampling and certification: To determine if functional materials are truly being adopted.
6. Revenue share from industrial applications: To assess the extent of the shift from jewelry to industrial materials.
7. Equipment orders: To gauge actual demand for capacity expansion and technological upgrades.

 

In short: look beyond capacity; focus on product mix, customer certification, and revenue composition.

 

  VIII. Conclusion: The ultimate destination for diamonds may well be as an industrial material.  

The most common misconception about lab-grown diamonds stems from the word "diamond" in their name. While lab-grown diamonds certainly possess characteristics of a jewelry product, focusing solely on the jewelry aspect risks trapping the sector in a cycle of falling prices and oversupply.

 

The real area worth exploring is whether the industry can transition from producing rough stones for jewelry to manufacturing functional diamond materials. In the short term, the outlook depends on price stabilization; in the medium term, on equipment capabilities and CVD process technology; and in the long term, on applications in semiconductor heat dissipation, power devices, quantum sensing, and high-end industrial sectors.

 

  FAQ  
Q1: What is the difference between lab-grown diamonds and natural diamonds?

• Lab-grown diamonds are synthesized using HPHT or CVD technologies; chemically and structurally, they are identical to natural diamonds (pure carbon). They are neither cubic zirconia nor moissanite. The key differences lie in their formation process, supply elasticity, pricing structure, and consumer perception.

 

 

Q2: Which technical route is more important-HPHT or CVD?

• HPHT is better suited for the mass production of small-to-medium rough stones and industrial-grade diamonds, an area where China holds a distinct advantage thanks to its six-sided anvil press technology. CVD is better suited for producing large, high-purity, wafer-like crystals, making it more aligned with applications in semiconductor heat dissipation and high-end functional materials.

 

Q3: Why is the lab-grown diamond sector shifting from a jewelry theme to a functional materials theme?

• Because diamonds possess material properties such as high thermal conductivity, extreme hardness, a wide bandgap, and high breakdown field strength, enabling their use in semiconductor heat dissipation, power devices, optical windows, and quantum sensing. Jewelry represents only the initial stage of application.

 

Q4: Which A-share companies should be monitored in the lab-grown diamond sector?

• Key companies to watch include Zhongbing Red Arrow, Huanghe Whirlwind, Power Diamond, Sifangda, Sinomach-Precision, and Worldia. However, it is important to distinguish between rough stone production, equipment manufacturing, superhard materials, high-end CVD capabilities, and jewelry retail channels, rather than simply relying on broad thematic labels.

 

Q5: What are the biggest risks associated with investing in lab-grown diamonds?

• The primary risks include continued price declines in the jewelry segment, oversupply resulting from industry-wide capacity expansion, competitive pressure from Indian CVD production capacity, and the lengthy validation cycles for semiconductor and quantum applications, which make it difficult to generate revenue in the short term.