While diamonds are famously a symbol of enduring love, the industrial material they are made from—diamond—is now finding a new purpose in cooling AI chips and data centers.
Recently, the synthetic diamond materials sector saw a significant rally, briefly ranking first among A-share industry gainers. Henan Liliang Diamond Co.,Ltd.
Shares of Liliang Diamond hit an intraday high of 89.74 yuan on May 29th, with its market capitalization briefly exceeding 23 billion yuan, effectively doubling in just two months before pulling back. As of the close on June 2nd, the company's share price was 75.81 yuan, with a total market cap of approximately 19.73 billion yuan.
The surge in this sector is linked to media coverage highlighting the application of synthetic diamond in heat dissipation, bringing this long-quiet segment back into the spotlight. Research reports suggest 2026 could mark the beginning of large-scale commercial adoption for synthetic diamond materials, which are being touted as a potential "ultimate material" for data center cooling. The market size for synthetic diamond heat dissipation in the AI field is projected to reach between 48 billion and 90 billion yuan by 2030.
Amidst this current excitement, veteran investors' memories are still fresh. In 2022, Liliang Diamond rode the wave of the lab-grown diamond consumption trend, with its share price soaring past 100 yuan to a historical peak. However, due to factors like pricing pressure on its core products, the company's revenue and net profit declined for three consecutive years, and its stock underwent a deep correction.
Now, with the new heat dissipation trend taking off, a familiar story of rapid share price appreciation is playing out again. The key question is whether Liliang Diamond can translate this concept into tangible performance and avoid a repeat of the previous sharp downturn.
Recovery After a Three-Year Downturn
In September 2025, a 156.47-carat lab-grown diamond crystal, the largest known single-crystal lab-grown diamond in the world, was a centerpiece at a major trade fair. This brought its producer, Liliang Diamond, significant attention.
Founded in 2010, Liliang Diamond is engaged in the R&D, production, and manufacturing of lab-grown diamonds and superhard materials. Its main products are lab-grown diamonds, diamond crystals, and diamond micropowder.
It listed on the ChiNext board in September 2021. That year, its revenue reached 498 million yuan, a year-on-year increase of 103.50%, and its net profit attributable to shareholders was 240 million yuan, up 228.17%. The company attributed the performance growth primarily to a significant increase in the sales proportion and improved profitability of its lab-grown diamond products.
In 2022, the company's revenue hit 906 million yuan and net profit reached 460 million yuan, both record highs. Its share price also peaked that August at 134 yuan, driven by strong earnings and high industry demand.
The high point was followed by a downturn. From 2023 to 2025, the company's financial performance declined each year. By 2025, revenue had fallen to 632 million yuan, down 7.84% year-on-year, and net profit dropped to 109 million yuan, a decrease of 45.57%.
All three core businesses faced pressure in 2025. While lab-grown diamond revenue grew slightly, its gross margin fell sharply to 21.78%. Revenue from diamond crystals and diamond micropowder both declined significantly year-on-year.
The company cited intensified competition in the photovoltaic industry affecting demand for diamond micropowder and price competition in the lab-grown diamond sector for the 2025 performance decline, though it noted diamond prices began stabilizing in the fourth quarter.
On the stock market, after peaking in 2022, Liliang Diamond's shares fell in 2023 before recovering somewhat in 2024 and 2025. In 2026, the stock surged, with the May 29th high marking a doubling in two months and reaching its highest level in nearly three and a half years.
This rally is supported by a strong Q1 2026 earnings rebound, with revenue and net profit up 55.85% and 147.10% year-on-year, respectively. The company stated its diamond micropowder business has bottomed out and stabilized, with positive trends in its crystal and lab-grown diamond segments.
Beyond the earnings recovery, the new heat dissipation application for synthetic diamond has been a major catalyst for the recent stock surge.
From Bulk Material to High-Tech Component
As the hardest natural material, diamond's primary value has traditionally been in its cutting and wear-resistant properties, making it a crucial consumable in industries like construction, machining, and semiconductor polishing.
Lab-grown diamonds represented an innovation within this field, creating gem-quality stones through a process that simulates natural diamond formation. However, both traditional diamond crystals and lab-grown gems largely remained within the established frameworks of "superhard material" or "consumer jewelry."
In recent years, driven by AI and computing infrastructure development, diamond has been given a new technological purpose, evolving from an industrial abrasive sold by weight to a high-tech "chip cooling patch" sold by the piece.
Media reports highlight diamond's exceptional thermal conductivity, which is five times that of copper. Major industry players have announced plans to adopt new cooling solutions incorporating diamond composite materials.
Local industry leaders are moving quickly. One company's management stated plans to expand capacity to produce 150,000 diamond heat dissipation sheets annually within three years. Another noted that existing capacity cannot meet demand, with a new factory slated for completion by the end of next year.
In this competitive landscape, Liliang Diamond's progress is closely watched. In mid-May, the company stated it is fully investing in R&D and capacity planning for this area, indicating that diamond heat dissipation could become a core growth driver.
The company added that the window for scaled application of diamond thermal materials has arrived, with various composite and crystal forms being developed industry-wide. It reported that several domestic semiconductor and tech companies have engaged with it for sample testing and R&D cooperation.
The Path from Concept to Revenue
Following the recent stock surge, Liliang Diamond issued a risk warning. It clarified that diamond heat dissipation technology has not yet reached the stage of large-scale market application and has not impacted its main business or revenue. It also cautioned about the stock's high short-term volatility and potential for a rapid decline.
The diamond heat dissipation sector is now seen as a vast, emerging market. Compared to the cyclical consumer market for lab-grown diamonds, this new application is rooted in high-tech fields like semiconductors and AI computing, featuring higher technical barriers and potentially more sustainable long-term prospects. It represents a key opportunity for superhard material companies to upgrade their business models.
The transition from consumer diamonds to computing cooling presents a new narrative. Ultimately, market enthusiasm must be validated by actual financial performance. Observers will be watching to see if Liliang Diamond can leverage this new technological frontier to break through industry competition, meet market expectations, and avoid a repeat of the post-boom downturn seen in its previous growth cycle.
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