Japan and the United States are exploring the establishment of a synthetic diamond manufacturing facility in the US as part of Japan’s proposed $550 billion investment programme, according to a Reuters report citing sources familiar with the matter.

The proposed plant would focus on the production of lab-grown diamonds (LGDs) for industrial use, including applications in semiconductors, precision cutting tools and other advanced manufacturing technologies. Synthetic diamonds are increasingly viewed as a critical input for high-end industries due to their durability, thermal conductivity and performance advantages.

Discussions come amid rising concerns in Washington and Tokyo over global supply chain vulnerabilities, particularly the heavy reliance on China, which currently dominates synthetic diamond production. China has also imposed export controls on certain strategic materials, heightening the urgency for alternative supply sources.

The project could be among the early initiatives announced ahead of a potential visit by Japan’s prime minister to Washington. Companies such as Element Six, the industrial diamond arm of the De Beers Group, are said to be potential participants, while Japanese state-backed institutions may provide financial support.

Sources cautioned that talks are still at an early stage and no formal agreements have yet been finalised.