The setup
In the first brief, the verdict was that gem-grade lab-grown prices are still falling, just more slowly. That answer assumes the supply side stays where it is — a cost-plus commodity produced at scale by hundreds of uncoordinated CVD growers in India and China. AI and data-centre buildouts threaten to break that assumption from two directions at once: by pulling production capacity away from gem-grade material into far higher-margin industrial uses, and by raising the marginal cost of every diamond grown through electricity prices. If both forces compound, the floor under jewellery lab-grown prices stops being a soft cushion and starts being a hard one.
Channel 1: Industrial demand pulls capacity away from gems
The same CVD process that grows a 1-carat G/VS1 jewellery stone also grows the diamond wafers, plates and thin films now being designed into AI chips, GPUs, power electronics and quantum devices. The industrial story is no longer speculative.
Thermal management for AI chips is going mainstream. NVIDIA has publicly committed to a “diamond-copper composite” cooling solution on its next-generation Vera Rubin architecture GPUs, pairing roughly 100–300 micron CVD diamond plates with copper and tungsten substrates. The driver is brutally physical: GPU power draw has already crossed 1,400 W per chip and is projected to exceed 2,000 W by 2027, with heat flux density above 1,000 W/cm². Diamond’s thermal conductivity is roughly five times copper’s and more than eight times aluminum’s, and tests show it can pull hot-spot temperatures down 10–20°C versus copper alone. Coherent’s June 2025 launch of a diamond-loaded silicon-carbide composite for AI data centres confirmed the same direction from the supply side.
Diamond semiconductors are scaling. Different market trackers put different numbers on the diamond-semiconductor opportunity — SkyQuest pegs the materials market at roughly USD 2.1 B in 2025 growing at a 26.3 percent CAGR to USD 17.8 B by 2034; DataIntelo’s narrower slice grows from USD 88 M in 2024 to USD 695 M by 2033 at a 25.8 percent CAGR. The methodologies differ, but the directional signal is consistent: the diamond-as-semiconductor market is growing at multiples of any growth scenario for jewellery lab-grown. Power Electronics News has gone as far as calling diamond the defining wide-bandgap material of the 2030s for data-centre power conversion.
Quantum is no longer just a lab story. The NV-centre diamond sensing market was around USD 1.2 B in 2025 and is forecast to roughly quadruple to USD 4.8 B by 2034 at a 16.7 percent CAGR. Over 40 companies reported commercial NV-sensor shipments in 2026, and Element Six’s DNV-B1™ quantum-grade diamond is now the reference substrate. Quantum-grade material commands an entirely different price-per-gram than VS1 jewellery rough.
What this means for jewellery rough. Industrial CVD reactors and jewellery CVD reactors are largely the same hardware. As Element Six, Coherent, Sandvik’s diamond business and dozens of Indian and Chinese growers chase semiconductor and quantum margins, capacity that would otherwise produce jewellery rough gets reallocated to higher-value plates and wafers. The bigger growers in Surat could be the first to pivot — they already have the scale and the process control needed for industrial customers. If even 15–20 percent of global gem-grade CVD capacity migrates to industrial in the next two to three years, the supply glut that drove prices down 74 percent from 2020 to 2025 starts to unwind.
Channel 2: AI is making electricity more expensive — and lab-grown diamonds are an electricity product
Energy is the single largest variable cost in a CVD diamond. Efficient modern growers run roughly 250–750 kWh of electricity per polished carat, with reactors running continuously for weeks per growth cycle. Producer costs sit in a band of roughly USD 300–500 per rough carat at industrial scale, with electricity the dominant line.
That cost base was built for cheap, abundant grid power. AI is changing that:
- The International Energy Agency reports data-centre electricity use climbed 17 percent in 2025 — more than five times faster than global electricity demand overall — and AI-specific data centres faster still. Total data-centre demand is approaching 1,050 TWh by 2026, equivalent to the fifth-largest country consumer.
- US grid impact: Capacity-market clearing prices for the 2026–2027 delivery year hit USD 329.17/MW, more than 10 times the USD 28.92/MW of 2024–2025, with data-centre growth named as the principal driver. Wholesale power in regions near major data-centre clusters is up as much as 267 percent over five years.
- India: Domestic data-centre capacity is forecast to expand from roughly 1.4 GW in 2024 to 9 GW by 2030, lifting their share of national electricity consumption from under one percent to about three percent. Surat — the heart of the world’s CVD jewellery diamond cluster — sits inside the same grid that will be powering that AI buildout.
If electricity rises 15–25 percent in Surat over the rest of the decade, every CVD reactor running there sees its dominant variable cost climb. That puts a hard upward pressure on the producer cost floor of jewellery rough. Growers will not sell below cash cost for long.
Channel 3: The branded-anchor vacuum
A subtler dynamic worth tracking: De Beers wound down its Lightbox lab-grown jewellery business in 2025 specifically because the category had collapsed into cost-plus economics. As the same company shifts to natural diamond and to industrial diamond applications, the lab-grown jewellery side loses its biggest branded anchor. If industrial demand simultaneously lifts the cost floor, the lab-grown jewellery price stops being defined by “how low can growers go” and starts being defined by “what does the cheapest viable producer charge above industrial-grade alternative uses for the same reactor hour.”
What it would actually take to push lab-grown jewellery prices up
For the trade in Canada, a realistic upside scenario looks something like this, and all four conditions would need to hold:
- NVIDIA-style adoption of diamond thermal management scales beyond pilot — i.e. multiple hyperscalers (Microsoft, Meta, Google, AWS) standardising on diamond plates by 2027–2028.
- Industrial customers begin sourcing aggressively from Surat and Chinese CVD growers, paying a meaningful premium for quality and consistency.
- Indian electricity costs rise materially as the country’s data-centre capacity ramps toward 9 GW by 2030.
- The branded-anchor vacuum left by Lightbox is not filled by a new aggressive value-led entrant.
If all four happen, gem-grade wholesale lab-grown could begin to stabilise or rise modestly — particularly at premium specifications (1 ct+, D-F, VVS) — within a 2027–2029 window. The likeliest path is not a return to 2020 pricing but a transition from steady decline to flat, then to single-digit annual increases.
The Canadian angle
Canada’s direct exposure to the industrial-diamond shift is concentrated and worth knowing for the trade:
- Groupe RSL (Quebec) is the only Canadian producer of lab-grown diamond gems, growing CVD stones powered entirely by hydroelectricity — a Canadian competitive advantage if global electricity costs rise. No published Canadian industrial CVD foundry is currently shipping to the AI/data-centre supply chain at scale; that is a gap.
- Canadian quantum research programs at the University of Waterloo, the Institute for Quantum Computing, and several federal initiatives are downstream consumers of quantum-grade diamond, but the substrates are imported (largely from Element Six).
- Canadian retail pricing for lab-grown should be considered a lagging indicator: any tightening of supply from industrial reallocation will show up in wholesale invoices to Canadian jewellers six to twelve months before retail tags move.
What is unavailable on the Canadian side: there is no publicly tracked Canadian wholesale price index for lab-grown diamonds, no Canadian Jewellers Association reporting on industrial-versus-jewellery reactor allocation, and no domestic data on Canadian retailer exposure to Surat versus Chinese supply. Where US, Indian and global data are quoted above, that is by necessity.
Net call for the Canadian trade
The base case for the next 12 months remains “prices still falling, but more slowly.” The risk to that base case is no longer “they fall faster” — it is the opposite. Industrial diamond demand from AI thermal management, power electronics and quantum sensing is real and scaling, and AI-driven electricity costs are tightening the cost floor underneath every CVD reactor. The combination won’t lift jewellery lab-grown prices in 2026, but it materially raises the probability of a price floor — and an eventual modest reversal — by 2027–2028. That is a planning horizon worth carrying into purchasing and positioning conversations now.
Sources
- NVIDIA Vera Rubin diamond cooling — CSMH analysis
- Diamond Heat Sink — GPU Cooling Future, CSMH
- Man-Made Diamonds: The Coolest Material for Red Hot AI Chips — Varsity Technologies
- Diamond Materials for Semiconductor Market — SkyQuest
- Diamond Materials for Semiconductor — DataIntelo 2034 forecast
- Why Diamond Could Define the 2030s Power Electronics Era — Power Electronics News
- Advancing Diamond Semiconductors for Sustainable, Efficient Data Center Power — Data Center Knowledge
- NV Center Diamond for Quantum Sensing Market — DataIntelo
- Element Six DNV-B1 Quantum Grade Diamond Launch
- Element Six on CVD Diamond in Quantum Technologies — Metal Powder Tech
- Synthetic Diamond Innovations in Quantum Metrology — Physics World
- How Much Does It Cost to Make a Lab-Grown Diamond — Kintek
- Kira Jewels Expands Lab-Grown Diamond Production in Surat — National Jeweler
- IEA — Data Centre Electricity Use Surged in 2025
- Goldman: Electricity Prices Will Keep Rising on AI Data Centre Demand — CNBC
- Bloomberg — How AI Data Centers Are Sending Power Bills Soaring
- IEEFA — India’s Power-Hungry Data Centre Sector at a Crossroads
- De Beers Shuts Lab-Grown Lightbox — WWD
- Groupe RSL — Canada’s First Lab-Grown Diamond Gem, BusinessWire
