【韩国】Lab-Grown Diamonds: Mirage or New Crack?

Just a few years ago, lab-grown diamonds were hailed as an innovation that shook the long-standing order of the hardest gemstone on Earth. While they are essentially the same carbon crystal, they are significantly cheaper and come with the added label of being ‘ethical,’ which led to consumer frenzy and a rush of investors. However, the future of this market has become uncertain following De Beers’ recent announcement that it will withdraw from the lab-grown diamond retail business. With the Gemological Institute of America (GIA) also signaling a reform of its grading system, the industry is meticulously analyzing the movements, as if examining internal flaws through a jeweler’s loupe.

De Beers is a symbol of the diamond empire. When it launched the lab-grown diamond brand ‘Lightbox’ in 2018, it was seen as a strategic move to simultaneously control both the traditional mining market and the lab-grown diamond market. However, after Lightbox’s new products last year recorded disappointing performance, the lab-grown diamond retail business is finally closing its doors. De Beers has shifted its focus back to re-evaluating the ‘scarcity’ brand value of natural diamonds, alongside the downturn in the mining industry.

Experts compare the speed of price decline for lab-grown diamonds to a mirage. In fact, due to technological advancements, the production cost of lab-grown diamonds has fallen by more than 20% annually. According to Edahn Golan, a diamond manufacturing research firm, the wholesale price of a 1-carat lab-grown diamond in the US market in 2023 was only half of what it was just four years prior. Scarcity ultimately arises from supply limitations, so lab-grown diamonds, which can be produced without limits, cannot escape price decline pressures over time. The price consumers might receive when reselling these gems in the second-hand market a decade later is inevitably more bleak. This is the same reason De Beers closed its doors, stating ‘the experiment is over.’

An issue as significant as De Beers’ move is GIA’s announcement of a grading system reform. GIA is the world’s largest gemological institute, to the extent that it’s said ‘a single grading report determines the price.’ Until now, GIA has assigned grades to both natural and lab-grown diamonds using the same 4C criteria (cut, color, clarity, carat). However, starting in 2025, this will change to two options: Standard and Premium. Notably, the Standard version will only feature a simple grade without detailed 4C sub-grades.

This symbolically reflects the evolution of the lab-grown diamond market. While GIA views lab-grown diamonds as ‘the same diamond,’ it is signaling that differentiation is necessary as a means of value preservation. In fact, according to GIA’s internal data, there was feedback that a significant number of lab-grown diamond owners ‘misunderstand the value guaranteed by the grading report and face major confusion when reselling.’ Consumers must pay an additional fee to receive a Premium grading report.

Credibility comes from the grading report. According to a survey by the International Gemological Institute (IGI), 8 out of 10 consumers require a grading report from an international institution like GIA or IGI when purchasing a diamond. However, when this trust leads to questions like, ‘They’re the same diamond, so why are the prices so different?’ the market becomes murky. GIA’s reform can be seen as an attempt to clarify this contradiction, at least to some extent.

Experts do not conclude that ‘the lab-grown diamond market is over.’ However, lab-grown diamonds have clearly reached a turning point where they are establishing themselves as gems to ‘buy cheaply, use for a long time, and not expect high resale value.’ And GIA has announced this shift through its grading system reform, while De Beers has done so through its business withdrawal. Diamonds still sparkle, but it’s time to recalculate how that sparkle will reflect in one’s bank account.