Sarine Technologies Ltd. reported a net loss of $3.49 million for the first half of 2026, as competition from lab-grown diamonds and weak luxury demand in key markets continued to weigh on the diamond industry.

The Israel-based diamond-technology company said it expects market conditions to remain challenging, although anecdotal reports indicate that retail demand for natural diamonds has remained relatively stable.

Sarine’s loss for the six months ended June 30 compared with a $3.7 million loss in the second half of 2025 and a $166,000 loss in the first half of last year.

The company attributed the latest deficit primarily to higher operating expenses, which increased about 25% from a year earlier. Nearly half of that increase was linked to the impact of a weaker U.S. dollar against the Israeli shekel.

The natural-diamond polishing sector continued to face pressure from lab-grown diamonds, particularly in the U.S., while subdued luxury spending in China added to the strain. Sarine said those conditions hurt sales of capital equipment and some of its traditional services.

Some parts of the business, however, showed stronger momentum. Revenue from Sarine’s Most Valuable Plan, or MVP, more than doubled in the first half as diamond manufacturers increasingly adopted artificial-intelligence-driven planning tools to improve yields and reduce production costs.

Certification activity at GCAL, in which Sarine acquired a 70% stake in 2023, also increased more than 50%. The growth helped cushion weaker sales of capital equipment and lower volumes from the company’s Galaxy scanning business.

Revenue declined 6% year over year to $14.41 million, while the operating loss stood at about $2.2 million.

The results underscore the uneven impact of the diamond market’s structural shifts on technology providers. While traditional equipment and services remain exposed to pressure on natural-diamond manufacturing, demand for technologies that improve efficiency and reduce costs is gaining traction as manufacturers contend with tighter margins.