Japan and the US plan to build a synthetic diamond factory in the US to strengthen the supply of key materials for chips.

Japan and the United States are promoting the construction of a synthetic diamond factory in the U.S., which is a priority project in Japan’s $550 billion U.S. investment plan. The move aims to establish a supply chain for key semiconductor materials, with synthetic diamonds being a core material for chip manufacturing and high-precision processing.

According to a Reuters report on Tuesday, the project may be among the first investment projects to be announced, with details expected to be released before Japanese Prime Minister Sanae Takaichi’s earliest possible visit to the U.S. in March.

"The United States hopes to accelerate domestic production of synthetic diamonds," said one insider. By bringing in Japanese companies, Washington hopes to establish a U.S.-Japan supply chain.

The project involves Element Six, part of De Beers Group, a global leading diamond company. Aside from the synthetic diamond factory, large-scale power generation projects involving Hitachi Group may also make the first list.

Investment Plan Accelerates Implementation

Japan is speeding up the implementation of projects under this investment plan. The plan is part of a tariff-reduction agreement reached between Tokyo and Washington regarding Japan’s exports. Investment funds will include equity investment, loans, and loan guarantees from state-owned institutions such as the Japan Bank for International Cooperation (JBIC) and Nippon Export and Investment Insurance (NEXI).

Meanwhile, President Trump is increasing tariffs on South Korea, accusing it of delaying the adoption of a similar agreement reached last year.

Japan’s Ministry of Trade declined to comment on the projects under discussion, stating only that it is in talks with the U.S. to establish a project pipeline as soon as possible, but no decisions have been made yet. Hitachi said it is in discussions with both the Japanese and U.S. governments, but declined to comment further.

The Strategic Value of Synthetic Diamonds

As one of the hardest known materials, diamond is crucial to high-precision manufacturing. It is used in ultra-fine polishing of semiconductors, processing of hard metals and ceramics in quantum devices, and heat dissipation in advanced electronic systems.

Synthetic diamonds also have dual military-civilian uses, and can be applied in the production of ammunition and radar components. This makes the security of the synthetic diamond supply chain a strategic concern for both Japan and the United States.

According to previous Reuters reports, major infrastructure projects such as data center construction involving SoftBank Group also remain on the final candidate list.

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