Diamonds in Decline: How Lab-Grown Gems and Market Shifts Are Reshaping the Industry

The diamond industry is facing a seismic shift, but not for the reasons you might think. While the rise of lab-grown diamonds is certainly a disruptive force, a convergence of slowing demand, sanctions and an increasingly ethically-aware consumer class are reshaping the face of what has historically been one of the world’s most sought-after commodities.

The global diamond market, valued at roughly $80 billion, is experiencing a period of significant flux. As Tim Treadgold notes in Forbes, “Diamond mining is losing its sparkle as lab-grown market share rises.” This shift is driven by several factors, including growing consumer awareness of ethical concerns surrounding mined diamonds, the increasing affordability and availability of lab-grown alternatives, and a general decline in demand, particularly from China. De Beers, the industry giant, has acknowledged this pressure by recently slashing rough diamond prices by 10-15 per cent, while shifting demand from the US and China saw prices reach a 14-year low.

Lab-grown diamonds are competitive for a number of reasons. Firstly, they are significantly cheaper than their mined counterparts. Martin Rapaport, a leading voice in the industry, highlights this starkly, stating that “synthetic diamonds carry a 1,422 per cent markup compared to natural diamonds at 6-9 per cent.” This price disparity, coupled with the fact that lab-grown diamonds are almost impossible to differentiate from natural ones, makes them an increasingly attractive option for consumers. As stated by Susan Jacques, GIA President and CEO, “We are 100 percent able to differentiate between the laboratory-grown and the natural stone, and we have a lot of instruments we develop solely for use within our internal grading capacity. It is almost impossible for most people to look at a lab-grown and a natural stone, side-by-side, and make a determination. It’s even difficult for gemologists. It requires the skill sets of the laboratories.”

Secondly, diamond mining is not only a costly activity in every aspect of the word, but furthermore unpredictable. Where speculation and output are somewhat of a gamble, lab-grown diamonds represent a highly predictable, easy-to-catalogue product without any of the ESG baggage inherent with naturals. However, the impact of lab-grown diamonds extends beyond mere competition with mined stones. Their unique properties open up new avenues for innovation and application. The future of lab-grown diamonds is inextricably linked with the tech industry, where their exceptional hardness, thermal conductivity, and optical properties make them ideal for use in semiconductors, lasers, and other high-tech applications. This burgeoning demand ensures that lab-grown diamonds are not a passing fad, but rather a permanent fixture in the global economy. Commenting on his company’s development, Diamond Foundry CEO, Martin Roscheisen said, “Our master plan has always been to first introduce sustainable diamonds wherever mined diamonds have been able to go. Step two was to introduce single crystal diamond wafers to enable the most advanced technology.” At just 100mm in diameter, with a weight of 110 carats, Diamond Foundry’s breakthrough can be bonded on top of a regular silicon microchip, enabling the heat produced to dissipate. The outcome: a silicon diamond-paired chip that can run faster and longer, with reduced hot spots and up to three times their usual speed.