The 20-year-old player was acquired by Sporting in a €12.5 million (£11m) deal from FC Midtjylland in Denmark 14 months ago. Since then, he has had an immediate impact in Portugal.
As part of their agreement with Sporting, Midtjylland included a 20% sell-on clause, while Diomande has a release clause of €80m (£68.5m).
According to Record, Chelsea has expressed their willingness to offer a fee of €60m (£51.4m) to sign Diomande. However, Arsenal has now intensified their interest and has engaged in discussions with both Sporting and Diomande regarding a potential summer transfer for the defender.
The report suggests that Arsenal has made it clear that they will match Chelsea’s bid of €60m (£51.4m), which could potentially increase further with additional bonuses.
In addition to Arsenal, Liverpool, Newcastle United, and Bayern Munich have also been linked with a possible move for the Ivory Coast international.
Diomande already has experience playing against Premier League teams, as he faced Arsenal in two Europa League matches last season.
Last summer, there were reports that Arsenal had a bid of €35m (£30m) for Diomande rejected by Sporting. However, the Gunners vowed to make another offer at the end of the season.