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Structural Adjustment of the Diamond Industry: New Challenges and Opportunities

2024-07-03 09:46:20

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What the diamond industry is facing now is not a simple fluctuation in supply and demand, but a profound structural adjustment.


Recently, the diamond industry is quietly undergoing a structural adjustment while responding to market challenges. Faced with global economic fluctuations, changes in consumer preferences and competition from lab-grown diamonds, some diamond merchants have begun to turn their attention to the semiconductor industry to seek new growth points.





Cause Analysis

The diamond industry is undergoing profound structural adjustments, rather than simple fluctuations in supply and demand. Its development can be summarized into four stages: the original disorder period (before 1888), the resource power adjustment period (1888-1940s), the rapid growth period (driven by the concept of "eternity", 1940s-early 21st century), and the post-epidemic challenge period (early 21st century-present). After De Beers' marketing transformation, the natural diamond market relied on its existing advantages, encountered economic turmoil and the impact of cultivated diamonds, and social evaluation was disturbed. Each stage is accompanied by fluctuations in supply, demand and prices, and the root cause lies in structural changes.


 Changes in diamond price index from 1981 to 2021


Anish Aggarwal, co-founder of Gemdax, confirms two major disruptive factors in the diamond industry:
1
China Market Change

The expected recovery of the Chinese market after the epidemic has not come, but has fallen into recession. There are three reasons: the deteriorating economic environment and the sluggish real estate and stock markets have led to a decline in the purchasing power of the middle class; the rise of lab-grown diamonds has changed consumer perceptions; political tensions between the East and the West have intensified resistance to imported goods, and the worship of diamonds for value preservation has shifted to the pursuit of cost-effectiveness. Although high-net-worth individuals still prefer luxury goods, they also accept affordable options.

2
Lab-grown Diamond Promotion

The global promotion of lab-grown diamonds, especially in the United States, has shaken the natural diamond market, which accounts for 52%. The United States accounts for more than half of the sales, triggering heated debates in the industry on environmental protection, sustainable development, and industry reform. This trend has caused similar conflicts in many parts of the world, reflecting the clash of values between traditional and emerging forces.




The natural diamond industry is responding to structural changes through multiple strategic adjustments: De Beers and NDC restarted general marketing, but NDC funds were affected by sanctions; African countries strengthened their control over diamond resources, such as the President of Botswana attending the JCK exhibition; De Beers returned to its main business of natural diamonds under the risk of divestiture, strengthened retail promotion, or cooperated with Signet and Chow Tai Fook. However, these adjustments are mostly focused on retail marketing, and there is a lack of solutions at the economic and political levels. The industry continues to dispute over inflated prices and sanctions, reflecting market uncertainty. The global diamond industry is in a period of structural adjustment, and the future winners will depend on strategy, investment and opportunities.





Conclusion
Therefore, the diamond industry has recently initiated structural adjustments in response to market challenges and turned to the semiconductor industry to seek growth points. Global economic fluctuations, changing consumer preferences and competition for lab-grown diamonds have prompted this change. Due to its good thermal conductivity, high hardness and excellent electron mobility, diamond has shown potential in the semiconductor field, especially in solving chip overheating and improving device performance. Forward-looking merchants are adjusting their business and developing diamond semiconductor application technology, while retaining their jewelry business and exploring new markets. This cross-border transformation has brought new opportunities to the two industries, and the future application prospects of diamonds in the semiconductor field are promising.

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Structural Adjustment of the Diamond Industry: New Challenges and Opportunities
What the diamond industry is facing now is not a simple fluctuation in supply and demand, but a profound structural adjustment.
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