The Diamond Disruption: How Lab-Grown Gems Reshape a Legacy Market

WILMINGTON, DE – November 25, 2025 – A new market analysis suggests the tectonic plates of the global diamond industry are shifting faster than ever. According to a report from Allied Market Research, the lab-grown diamond (LGD) market, valued at $24 billion in 2022, is projected to surge to $59.2 billion by 2032, riding a compound annual growth rate of 9.6%. This explosive growth isn't just a niche trend; it signals a fundamental disruption to a centuries-old market built on rarity and romance.

Fueled by technological advancements, plummeting costs, and a powerful narrative of sustainability, lab-created diamonds are moving from the fringe to the mainstream. They are challenging the business models of mining giants, reshaping consumer preferences, and unlocking new high-tech applications that extend far beyond the jewelry counter. This isn't merely a story about a new product; it's about how innovation is redefining value, ethics, and the very definition of a precious gem.

The New Economics of Brilliance

The most potent force driving this disruption is price. As production technology, primarily Chemical Vapor Deposition (CVD), has scaled, the cost of manufacturing LGDs has collapsed. Wholesale prices have fallen by as much as 90% over the last several years, creating a value proposition that consumers find difficult to ignore. Buyers can now acquire a larger, higher-quality LGD for 30-40% less than a mined diamond of comparable specifications. This has had a seismic impact on the crucial bridal market. Recent studies show that lab-grown diamonds now account for over half of all center stones for engagement rings sold in the U.S., a staggering increase from just a few percentage points five years ago.

The legacy mining industry's response has been a case study in strategic adaptation under pressure. De Beers Group, the corporation that once famously declared “A Diamond is Forever” to cement the value of natural stones, initially entered the LGD market in 2018 with its Lightbox brand. The strategy was to commoditize the product with transparent, low pricing ($800 per carat), framing LGDs as a separate, lower-tier category for fashion jewelry. However, the relentless downward price pressure and eroding profitability led to a dramatic reversal. The company recently announced it would cease producing LGDs for jewelry altogether, pivoting its advanced manufacturing facilities to focus solely on industrial applications through its Element Six division. This strategic retreat underscores the economic challenge: it’s difficult to maintain a luxury premium in a market where supply is, in theory, limitless.

For retailers, this price collapse is a double-edged sword. While lower prices have attracted a flood of new customers, the drastically reduced dollar-value profit margins on LGDs are a growing concern. This may eventually incentivize jewelers to refocus their marketing efforts on the higher-margin natural diamonds, creating a new front in the battle for the consumer's heart and wallet.

A Generational Shift in Values

Beyond pure economics, the rise of lab-grown diamonds is inextricably linked to a cultural shift driven by Millennial and Gen Z consumers. For these generations, purchasing decisions are increasingly guided by a product’s ethical and environmental footprint. The lab-grown industry’s narrative of a clean, traceable, and “conflict-free” origin provides a powerful contrast to the historical baggage of mined diamonds, which, despite the Kimberley Process, are still scrutinized for potential human rights and labor issues.

However, the “sustainability” claims of LGDs are nuanced. The production process, whether HPHT or CVD, is extremely energy-intensive. A lab diamond's carbon footprint is entirely dependent on its power source. An LGD created in a facility powered by coal—as many are in major production hubs like China and India—can carry a larger carbon footprint than an efficiently mined natural diamond. Conversely, producers like Diamond Foundry in the U.S. leverage renewable hydropower to achieve a certified zero-carbon footprint. On other environmental metrics, LGDs have a clear advantage, using a fraction of the water and causing virtually no land displacement compared to traditional mining.

Recognizing the potential for misleading claims, regulatory bodies like the U.S. Federal Trade Commission (FTC) have stepped in. The FTC now mandates that any diamond not mined from the earth must be clearly labeled as “laboratory-grown” or “laboratory-created.” This ensures transparency but also solidifies the distinction in the consumer's mind, a distinction the natural diamond industry is keen to reinforce as it repositions its product as a finite, natural miracle—a true luxury good.

Beyond the Jewelry Box: Diamond as a Supermaterial

Perhaps the most significant long-term implication of this innovation lies not in jewelry, but in industry. The same technologies that create flawless gems also produce diamond material with unparalleled properties of hardness, thermal conductivity, and electronic performance. This is transforming diamonds into a critical enabling material for the next wave of technology.

The strategic pivots by both De Beers’ Element Six and the now-restructured WD Advanced Materials (formerly WD Lab Grown Diamonds) are telling. These companies are moving away from the volatile gem market to focus on producing scientific-grade diamond wafers for high-value industrial sectors. These applications include creating more efficient and powerful semiconductors for electric vehicles and AI data centers, developing ultra-precise surgical blades, and building foundational components for quantum computing.

This high-tech frontier is attracting serious investment. Venture capital is flowing not only to consumer brands but also to the technology companies perfecting the production of these supermaterials. Diamond Foundry, for instance, has raised over $300 million to scale its production for both its VRAI jewelry brand and its semiconductor division. This dual-market reality—one for accessible luxury and another for advanced technology—is creating two parallel and powerful growth engines. The disruption is no longer just about offering a cheaper alternative; it's about unlocking the full potential of a material that is both beautiful and uniquely functional.