Founder Securities Co.,Ltd. has released a research report indicating that artificial intelligence is accelerating the upgrade of synthetic diamonds from traditional superhard materials and discretionary consumer products into high-value functional materials. China accounts for over 90% of global synthetic diamond production and has established a complete industrial foundation in HPHT, CVD, and superhard materials. As AI computing power continues to escalate, two core physical properties of diamonds are opening up new high-value application spaces: first, leveraging ultra-high thermal conductivity to address the heat dissipation bottlenecks caused by high power consumption and high heat flux density in AI chips; second, utilizing ultra-high hardness and wear resistance to solve drilling challenges posed by advanced PCB materials such as M9/M9Q, high-layer count boards, and quartz fabric. Consequently, the synthetic diamond industry is poised to extend from traditional grinding, cutting, and lab-grown diamond markets into two new growth trajectories: AI chip thermal management and high-end PCB precision machining.

Where investment opportunities lie

Regarding diamond heat dissipation, with AI computing power consumption continuing to rise, short-term investment opportunities in advanced thermal management materials focus on the penetration rate of diamond-copper composite materials in servers. In the medium term, attention should be paid to the capacity deployment of large-size CVD diamond heat sinks, customer sample verification, and small-batch orders, as well as the yield rates and equipment ramp-up for large-size products like 8-inch wafers, and the upgrade of single-GPU value from localized small-area heat sinks to larger-area package-level heat spreader solutions. In the long term, the focus shifts to mass production capabilities for 12-inch and larger CVD diamonds, integrated solutions combining microchannel liquid cooling and packaging structures, and the ability of diamond materials to extend from simple heat spreaders to chip-level, package-level, and system-level thermal management platforms.

Diamond heat dissipation materials are typically not placed inside transistor circuits but rather along the heat conduction path near the bare die, with the core function being to rapidly spread localized hot spots on the chip before transferring heat to cold plates or heat sinks. Based on integration position, they are categorized into die-level (direct bonding to the chip backside), package-level (lid or cap), and system-level (working with cold plates for heat spreading). The main material types include diamond-copper composites, which are the most commercially advanced, polycrystalline and single-crystal diamond heat sink wafers, and direct diamond substrates replacing silicon substrates.

Using an equivalent NVL72 rack calculation of 72 GPUs per rack multiplied by single-GPU value and penetration rate, the market space is estimated as follows: under a scenario of 500,000 racks with a single-GPU value of $50, a 10% penetration corresponds to approximately RMB 1.26 billion in market space, while 100% penetration corresponds to RMB 12.6 billion. If the industry evolves from localized small-area heat sinks to larger-area package-level heat spreading, metallization, and precision machining, with single-GPU value rising to $100, the theoretical total addressable market could further expand to RMB 25.2 billion under the same rack assumptions.

Diamond drill bits for PCB applications

In the context of high-end AI PCB development and the introduction of high-hardness materials like quartz fabric, short-term industrial upgrade opportunities for diamond drill bits focus on the increasing penetration of M9/M9Q/M10 into high-end CVD diamond-coated drill bits. Medium-term focus is on the penetration of high-hardness materials such as quartz fabric, customer verification of PCD polycrystalline diamond drill bits, small-batch orders, and the realization of per-hole economic advantages driven by yield improvements and cost reductions. Long-term attention should be directed toward extending diamond drill bits into highly difficult precision machining scenarios such as advanced packaging substrates.

Diamond drill bits are ultra-hard micro-cutting tools that use diamond (single crystal, PCD polycrystalline, or CVD diamond coating) as the cutting working layer, combined with cemented carbide or steel substrates, designed for precision micro-hole drilling in hard, brittle, and highly abrasive materials. According to Frost & Sullivan forecasts, the global PCB drill bit market is expected to grow steadily from 2026 to 2030, reaching approximately RMB 10 billion by 2030, with a compound annual growth rate of 9.6% during the period. The market share of high-end coated drill bits is projected to increase from 31.3% to 50.5%. Diamond drill bits belong to the high-end precision drill bit category and will directly benefit from this premiumization trend.

Stocks to watch

Companies recommended for attention include SF Diamond Co., Ltd., Beijing Worldia Diamond Tools Co., Ltd., Sinomach Precision Industry Group Co., Ltd., CSGC North Industries Group Co., Ltd., Henan Huanghe Whirlwind Co., Ltd., Zhengzhou Sino-Crystal Diamond Co., Ltd., and Henan Huifeng Diamond Abrasives Co., Ltd.

Key risks

Risks include technology iteration failures, commercialization falling short of expectations, and extended certification cycles.