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Tokyo, Japan--Japan and the United States are considering building a synthetic diamond production facility in the U.S. as part of Japan's proposed $550 billion investment package, according to a Reuters report citing two people familiar with the discussions.

[Image via iStock.com/Anna Reshetnikova]

The project is a leading candidate for inclusion in an initial batch of investments that could be announced ahead of a potential U.S. visit by Japanese Prime Minister Sanae Takaichi as early as March, the report said. The sources declined to be identified because the talks are private.

According to the report, Washington is seeking to speed up domestic production of synthetic diamonds, which are critical for semiconductor manufacturing and other high-precision industries, while reducing reliance on China. China currently dominates synthetic diamond production, and recent export controls have underscored the material's strategic importance.

The project under consideration involves Element Six, a De Beers Group unit, the report noted. Element Six said no formal agreements are in place. Financing under the broader framework would include equity, loans, and guarantees from Japanese state-backed institutions JBIC and NEXI, according to the report.

Reuters also reported that other projects under review include a power-generation project involving Hitachi Ltd and a data center project linked to SoftBank Group. Japan's trade ministry said discussions are ongoing and no final decisions have been made.

Read the Reuters report here.