Editor’s Note
This article highlights how U.S. industrial policy, specifically funding from a major bilateral agreement, is shaping strategic supply chains. The potential selection of synthetic diamond production underscores a focus on advanced materials and technological sovereignty.
According to the Nikkei newspaper on the 29th, plans for synthetic diamond production in the United States are being reviewed as a leading candidate for the first case under the $550 billion U.S. investment and loan commitment stemming from the Japan-U.S. tariff agreement. Additionally, a power transmission and distribution equipment project involving Hitachi Ltd. (6501 JP) is also reported to be among the strong candidates.
According to negotiation sources, synthetic diamond is a core material from an economic security perspective, widely used in industries such as semiconductor manufacturing. Currently, China accounts for the majority of global production. The Chinese government added certain synthetic diamonds to its export control list in 2025, posing challenges for stable procurement by both Japan and the United States.
The fact sheet on U.S. investment released by the Japanese government in 2025 lists, as a project under consideration by Element Six Holdings, the “construction of a facility for manufacturing diamond abrasive particles using high pressure and high temperature.” The document includes the statement ‘involvement of Japanese suppliers and off-takers is under consideration,’ with the total project scale reaching $500 million. A plan for Japanese companies to participate as product purchasers is also being considered.
Hitachi Ltd.’s power transmission and distribution equipment project is also mentioned as a major candidate. The fact sheet describes it as “supply of power infrastructure including transmission facilities, substation facilities, and transformers for data centers, and strengthening of the supply chain.”
The Japanese government negotiated with the Trump administration, which demanded the removal of newly imposed tariffs, and reached an agreement to reduce tariffs in July 2025. In return, Japan promised $550 billion in investment and loans to the United States. Economy, Trade and Industry Minister Ryomasa Akazawa stated the policy is to aim for an announcement of the first U.S. investment and loan case by this spring. The Nikkei also reported that multiple projects could be simultaneously selected as the first case.
