Northeast: AI-driven heat dissipation reevaluates the diamond industry, accelerating domestic alternatives towards high-end development.

Northeast published a report stating that the mass production of diamond-copper composite materials has optimal performance elasticity in the short term, while the core focus in the medium to long term is on the domestic replacement of CVD single crystal equipment and large-sized wafers. Companies certified through leading computing power supply chains are likely to see a re-evaluation of their valuations. The growth prospects in the diamond thermal management sector are clear, with multiple benefits such as the iteration of computing power hardware, generational advantages in material performance, and domestic industrial supply advantages working together to drive significant expansion in the market scale of the industry. A differentiated competitive landscape has formed among traditional superhard material companies, equipment manufacturers, and new material startups. Key points from Northeast are as follows: The AI computing power and thermal management sector is reconstructing industry logic, with domestic substitution accelerating the capture of high-end segments. The demand logic of the diamond industry is undergoing a fundamental reconstruction. While traditional abrasive business growth remains steady, AI computing power thermal management is opening a 240-fold increase in incremental space. The industry presents a structural differentiation with low-end capacity excess and a shortage in the supply of semiconductor-grade CVD diamond heat sinks. Competition has escalated to a contest of comprehensive strengths such as self-research in equipment and high-purity crystal processes, with leading companies possessing MPCVD equipment and 8-inch large wafer production capabilities continuously solidifying their barriers. The current sector exhibits a tiered supply pattern across three major technical routes, comprehensively covering the cooling needs across different gradients of computing power. The core of profitability depends on factors like the localization rate of CVD equipment and the penetration rate of computing power thermal management, with high-end semiconductor-grade diamonds forming the core profitability moat. In the short term, mass production of diamond-copper composite materials has optimal performance elasticity, while in the medium to long term, CVD single crystal equipment and large-sized wafer domestic substitution are the core focus. Companies certified through leading computing power supply chains are expected to see a re-evaluation of their valuations. Driving high growth in the industry: Multiple industrial logic collaboration resonates to strengthen the certainty of high growth in diamond thermal management. The growth prospects in the diamond thermal management sector are clear, with the iteration of computing power hardware, generational advantages in material performance, and domestic industrial supply advantages mutually amplifying each other to jointly drive substantial expansion of the industry market scale. 1) On the demand side, the power consumption of Nvidia's Rubin platform and the future Ultra version chips has surged, leading to failures in air cooling and the widespread adoption of liquid cooling. The stacking of 3D-HBM has intensified thermal pressure, revealing bottlenecks in traditional copper and aluminum materials. With its ultra-high thermal conductivity, diamond has become the core thermal management medium, and it is expected that the penetration rate of diamond thermal management in data centers will increase from 0.1% in 2025 to 12% by 2030, expanding the market scale 240-fold. 2) On the supply side, China controls over 90% of the global HPHT industrial diamond production capacity, but high-end MPCVD equipment is monopolized by overseas companies, with the domestic localization rate for 4 inches semiconductor single crystals being less than 20%, leading to a continuous widening supply-demand gap globally. 3) On the policy side, the country has introduced comprehensive export control policies that force the computing power supply chain to become self-controllable, clearly setting a target for the domestication rate of high-end heat sinks. 4) On the materials side, the core properties of diamonds are leading, having already been integrated into Nvidia's flagship GPU cooling system, significantly improving cooling and energy efficiency. 5) On the industrial side, a closed-loop domestic superhard materials industry cluster has formed, with local computing power manufacturers bulk-importing related solutions. Competitive landscape and core barriers: Capacity tiers are solidifying, and technical barriers in the high-end segment continue to rise. The global diamond industry has a clear hierarchy, with a significant Matthew effect, forming three tiers. The top tier is dominated by companies from the U.S., Japan, and Europe leading the CVD single crystal high-end segment, controlling the complete industrial ecosystem encompassing 8-inch large wafer growth and semiconductor packaging adaptations, thus monopolizing the core market for ultra-high-power chip single crystal heat sinks. The mid-tier mainly consists of leading domestic superhard material companies leveraging HPHT capacity advantages, focusing on breakthroughs in diamond-copper composite materials and 2-4 inch CVD polycrystalline heat sink products, penetrating the medium to high-end AI server liquid cooling supply chain. The lower tier consists of small to medium-sized vendors concentrated in the low-end abrasive and cultivated diamond sectors, with low product added value, intensified homogeneous competition, and resources continuously concentrated towards leading companies with high-end process capabilities. The current industry encompasses barriers such as self-research and mass production of MPCVD microwave equipment, ppt-level high-purity crystal growth processes, qualification certifications for Nvidia/domestic computing power long-cycle supply chains, and precision processing technologies for diamond-semiconductor heterogeneous bonding, thereby continually widening the competitive gap between leading companies and small to medium vendors. The growth paths of companies can be classified into three main categories: traditional superhard material manufacturers leveraging HPHT capacity advantages to expand into CVD high-end thermal management materials; equipment companies overcoming technological bottlenecks in domestic MPCVD equipment to extend wafer production businesses downward; and new material startups focusing on the single crystal heat sink segment, binding with leading AI chip manufacturers to provide customized thermal management solutions, forming a differentiated competitive landscape among these three pathways. Risk warnings: AI computing power iteration may fall short of expectations; improvements in CVD process yield may be slow, among others.