The Artificial Diamond Industry Under The China US Trade War

In recent days, many people may have already paid attention to the biggest international news, which is the trade war between China and the United States. For ordinary people like me, doing a good job in my own business, serving my customers well, and delivering high-quality products safely to customers are the most important things. Of course, we also continue to pay attention to the international situation. In this context, I would like to briefly share my personal views and ideas on Chinese synthetic diamonds. For reference only.

 

China has formed a significant industrial advantage in the field of synthetic diamond, which plays a key role in high-end manufacturing and defense industries due to its excellent physical properties. It is often referred to as the "industrial tooth" and "heat dissipation heart".

 

From the perspective of the global industrial chain, the United States has a certain dependence on synthetic diamonds in the military and high-tech fields. For example, the "Ultra Wideband Gap Semiconductor" program promoted by the Defense Advanced Research Projects Agency (DARPA) in the United States uses diamond as the core material, mainly based on its high thermal conductivity, radiation resistance, and high temperature resistance, making it suitable for equipment requirements in extreme environments.

 

In specific applications, high-power amplifiers for military radar, missile guidance chips, and spacecraft electronic equipment require extremely high requirements for material heat dissipation and stability. Ordinary materials often struggle to meet stable operation in high-power or high-temperature environments, while diamond exhibits good adaptability. In addition, large-sized diamond chips have become indispensable materials in key components such as extreme ultraviolet optical windows and high-power semiconductor heat sinks in lithography machines.

 

At present, the global production capacity and technology of synthetic diamonds are highly concentrated in China. Although the United States is making efforts to develop domestic production capacity, such as Diamond Foundry claiming to be able to prepare 4-inch single crystal diamond wafers, its production method is still batch wise, with a yield rate of about 60% of similar Chinese companies, and some core equipment components still need to be imported from China. The US Department of Defense has invested $350 million to build related factories, which are expected to reach full production by 2027. At that time, the annual output can only meet about 5% of domestic industrial demand, and the scale is not even comparable to the medium-sized factories in Henan Province, China.

 

In addition, the United States also faces challenges in supporting its industrial chain. The supply of high-purity methane in the upstream is insufficient, and there is a shortage of superhard alloy materials in the midstream. The sensors required for downstream detection equipment still rely on Chinese supply. In terms of human resources, there are already over 50000 workers in related industries in Henan Province, China, while there may be less than 500 technical personnel in the United States who can operate MPCVD (microwave plasma chemical vapor deposition) equipment.

 

If export controls are implemented, the United States may face supply chain pressure. It is understood that the inventory of high-end diamond cutting tools by American chip companies is about two to three months, and the reserve of diamond window plates required by military enterprises can only be maintained for about six months. If the supply is interrupted, the relevant production lines may be affected. ASML has stated that the production capacity of the core components of lithography machines may be affected by this, which in turn could affect companies such as TSMC and Intel, constraining the upstream of the high-tech industry chain.

 

In terms of alternative materials, although silicon carbide and cubic boron nitride have been proposed as alternatives, their performance still lags behind diamond. For example, the thermal conductivity of silicon carbide is only one-fifth of that of diamond, which may cause the junction temperature to rise by more than 24 ℃ when applied to high-power chips, affecting the lifespan of the equipment; Cubic boron nitride is prone to react with metals at high temperatures and is difficult to use for precision machining. The composite materials developed in the laboratory either have high costs or insufficient stability, and cannot be replaced on a large scale yet.

 

From a longer-term perspective, if the United States wants to establish its own supply chain, it not only takes several years to complete factory construction, but also needs to deal with issues such as production line debugging and shortage of technical personnel, while Chinese companies usually only need three months to achieve mass production of new products. In addition, China has formed a patent layout in the key technology field of MPCVD equipment, and American companies may need to pay high fees or invest longer research and development time to bypass relevant patents.

 

In terms of cost, China has relied on its advantage in green electricity to control the energy consumption cost per carat of diamond production at about one-fifth of that of the United States, and the product price is about 60% of that of the United States. This makes it difficult for domestic production capacity in the United States to form competitiveness in the international market.

It is worth noting that the United States is the world's largest consumer market for cultivated diamonds, accounting for about 80% of global demand. Its rough diamonds are mostly processed in India, and Indian raw materials mainly come from China. If export controls are extended to consumer grade diamonds, it may have a certain impact on consumer industries such as jewelry in the United States. Although its importance is lower than that of the industrial and defense sectors, it will further exacerbate the complexity of the supply chain.

 

Overall, the export control of synthetic diamond is not only related to the supply of a key material, but may also affect the technological development pace and industrial cost structure of the United States in the high-tech and defense fields, and even force it to lower performance standards in certain application scenarios, resulting in far-reaching impacts.