Market Dynamics Around the “Cultivated‑Diamond” Narrative

The afternoon session on February 27th saw the cultivated‑diamond cluster surge to multi‑day highs, with the flagship stock Wolde (20 cm) hitting the upper price limit and several peers—Liangliang Diamond, Qifangda, Hui Feng Diamond, and Huanghe Xuanfeng—registering double‑digit gains. This rally aligns with the broader institutional narrative that artificial‑intelligence (AI) servers are driving unprecedented demand for ultra‑hard materials, notably the M9‑grade copper‑clad PCB substrate that incorporates quartz (Q‑cloth). The resulting need for finer, longer‑lasting diamond‑tipped drill bits has lifted prices and volumes across the sector.

AI Servers, M9 PCBs, and the Diamond Drill‑Bit Conundrum

  • M9 Copper‑Clad Substrates: NVIDIA’s latest Rubin platform will employ M9‑grade copper‑clad boards. The quartz base of these substrates is markedly harder than traditional glass cloth, forcing drill‑bits to wear out rapidly. In fact, coating‑tipped drill bits now last only 150–200 holes per tip on M9 material—an 80 % drop from their lifespan on conventional substrates.
  • PCB Layer Expansion: The shift from 16‑ to 24‑layer PCBs further stresses the drilling process, amplifying the demand for durable, high‑precision diamond tools.
  • Heat‑Sink Constraints: AI chips generate significant thermal loads. As competition heats up, efficient heat dissipation becomes a bottleneck, positioning high‑performance diamond components as critical enablers.

These developments are not merely technical footnotes; they translate into tangible supply‑chain pressure that has already propelled the prices of diamond‑related stocks upward. Institutions have identified this link early, and the market’s reaction on February 27th confirms that the narrative is being priced in.

The 2025–2030 Market Outlook

A report from the Zhongyuan Jewelry Innovation Institute, released on December 6, 2025, projected the cultivated‑diamond market in China at ≈ 14 billion CNY in 2025, with a compound annual growth rate of 20 % leading to a valuation surpassing 102.5 billion CNY by 2030. This “blue‑water” opportunity positions China as a dominant player in the global cultivated‑diamond arena.

The current price action—captured by the 52‑week high of 52 CNY and a low of 25.78 CNY—illustrates the sector’s volatility but also its upward trajectory. With the market cap at ≈ 10.28 billion CNY for Henan Liliang Diamond and a price‑earnings ratio of 135.01, investors are betting on significant upside, albeit with a high valuation premium.

Forward‑Looking Assessment

  1. Supply‑Chain Tightening: The confluence of AI server deployment, M9 substrate adoption, and higher PCB layer counts is likely to sustain pressure on diamond‑tool suppliers. Henan Liliang, as a key player in this niche, is poised to capture a growing share of the premium segment.
  2. Capital Inflow: The post‑Spring Festival market opened with a “red‑opening” across indices, and institutional sentiment remains bullish. The sector’s momentum suggests that capital will continue to flow in, supporting further upside.
  3. Regulatory and Policy Backdrop: The Chinese government’s 15‑5 plan encourages high‑technology and resource‑based industries. The cultivated‑diamond sector, with its strong links to AI and advanced manufacturing, is likely to receive favorable policy treatment, including potential subsidies or tax incentives.
  4. Risk Considerations: High valuation multiples expose the sector to correction risk if AI server adoption stalls or if alternative drill‑bit technologies emerge. Moreover, commodity price swings in silicon and quartz could erode margins.

Strategic Implications for Investors

  • Hold a Focused Position: Given the sector’s nascent stage and high growth potential, a concentrated holding in leading names—such as Henan Liliang Diamond—can capture upside while limiting exposure to peripheral players.
  • Monitor AI Server Rollout: Quarterly updates on NVIDIA and other AI chipset manufacturers’ production volumes will serve as a barometer for downstream demand.
  • Watch for Technological Breakthroughs: Advances in drill‑bit materials (e.g., coated or composite alternatives) could redefine competitive dynamics.
  • Stay Alert to Macro‑Cycles: The broader macro‑environment, particularly interest rates and manufacturing output, will influence capital allocation to high‑growth technology sectors.

In sum, the cultivated‑diamond narrative has moved from a speculative theme to a data‑driven, technology‑backed thesis. The market’s current rally, underpinned by concrete supply‑chain catalysts and a robust growth outlook, signals a compelling opportunity for savvy investors willing to navigate the accompanying risks.