Japan and the United States are advancing plans to construct a synthetic diamond factory in the US, a priority project under Japan's $550 billion investment initiative in America. This move aims to build a resilient supply chain for critical semiconductor materials, as synthetic diamonds are essential components in chip manufacturing and high-precision machining.

According to reports on Tuesday, the project could be among the first investment initiatives to be formally announced, with details expected to be disclosed ahead of Japanese Prime Minister's potential visit to the United States as early as March.

"Washington aims to accelerate domestic production of synthetic diamonds," one informed source indicated, adding that by involving Japanese companies, the US hopes to establish a robust US-Japan supply chain.

The project involves Element Six, a subsidiary of the global diamond leader De Beers Group. Beyond the synthetic diamond facility, a major power generation project linked to Hitachi Group may also be included in the initial list of announced investments.

Investment initiatives are accelerating toward implementation as Japan pushes forward with project execution under this investment framework. This plan forms part of an agreement between Tokyo and Washington to reduce tariffs on Japanese exports. Funding will include equity investments, loans, and loan guarantees from Japanese government-backed institutions such as the Japan Bank for International Cooperation (JBIC) and Nippon Export and Investment Insurance (NEXI).

Concurrently, former President Trump has been increasing tariffs on South Korea, criticizing Seoul for delays in implementing a similar agreement reached last year.

Japan's Ministry of Economy, Trade and Industry declined to comment on the specific projects under discussion, stating only that it is negotiating with the US to quickly establish a project pipeline, though no final decisions have been made. Hitachi confirmed it is engaged in discussions with both governments but declined to provide further details.

Synthetic diamonds hold significant strategic value as one of the hardest known materials, making them crucial for high-precision manufacturing. They are used for ultra-fine polishing in semiconductor production, processing hard metals and ceramics for quantum devices, and heat dissipation in advanced electronic systems.

Synthetic diamonds also possess dual-use capabilities for both civilian and military applications, including the production of munitions and radar components. This dual-use nature makes the security of the synthetic diamond supply chain a strategic priority for both the US and Japan.

Previous reports indicated that large-scale infrastructure projects, such as data center construction involving SoftBank Group, remain on the final candidate list for the investment program.