De Beers' synthetic diamond company Element Six has entered a strategic partnership with Japan's renowned synthetic diamond company Orbray to co-produce the "world's highest quality single-crystal diamond wafers."
According to our understanding, the primary focus of this strategic collaboration is not the size of the wafers but their electronic-grade quality, which is why the term "quality" has been frequently emphasized in media reports. This content has been reported by various international media outlets.
How to Interpret This?
As a seasoned market trend analyst, De Beers' strategy can be outlined as follows:
- Abandoning Lab-Grown Diamond Production Capacity: De Beers is likely to give up its lab-grown diamond production capacity, which is already minimal and mostly sourced from Indian OEMs. By doing so, they aim to disrupt the flow of lab-grown diamond products entering the jewelry market at the cutting and polishing stage, instead directing the development of lab-grown diamonds towards the industrial market by enhancing the production quality to wafer-grade standards.
- Suppressing Lab-Grown Diamond Prices: De Beers seeks to devalue lab-grown diamonds in the jewelry market, ensuring that they neither replace the value of natural diamonds nor possess the qualities desirable for jewelry. The narrative suggests that lab-grown diamonds will be regarded as valueless, akin to moissanite and cubic zirconia. Chinese lab-grown diamond producers have been lowering prices, leading to a point of no return. De Beers seems prepared to make significant sacrifices, including potentially abandoning their Lightbox brand, to achieve this goal.
- Redirecting Lab-Grown Diamonds to the Industrial Market: If successful in steering lab-grown diamonds towards industrial applications, De Beers could stabilize the market share of natural diamonds. This move would severely impact Chinese lab-grown diamond producers, who dominate the production capacity. Inability to release capacity would lead to negative returns on initial investments and industry collapse, which De Beers likely intends.
- Encouraging Producers to Invest in Industrial Applications: De Beers may entice producers to invest in industrial applications, abandoning their capacity for jewelry market applications. This would mean sacrificing initial investments and betting on the future of the lab-grown diamond industry. Many Chinese producers might follow this path, having become accustomed to such strategies, without fully understanding the potential for further losses.
- Collapse of Lab-Grown Diamond Production Capacity: If lab-grown diamond production collapses, De Beers stands to benefit. The cutting and polishing industry in India would continue to labor in the natural diamond sector without any chance of upward mobility. In the industrial application sector, Chinese producers, who typically follow trends and show little willingness to invest, will find it challenging. Companies like Huawei are exceptions, not the norm.
In the end, fortune favors the resilient. In this world, those who adapt and go with the flow tend to survive longer. After all, survival comes first, then development. What other choice is there?