Shaw faces a bleak future at Manchester United after being overlooked for Premier League opportunities this season by Jose Mourinho.
So it comes as a potential boost for Newcastle that Manchester United have reportedly identified a replacement for Shaw.
Diaz plays for Agropecuario and is just 21-years-old.
United have managed to cope at left-back without Shaw, selecting Ashley Young, Daley Blind and Matteo Darmian at various points this season.
Bringing in a young player like Diaz as competition would be a shrewd move, especially as Shaw has fallen out of favour.
Manchester United could likely make a big saving on wages by shunting Shaw off and signing Diaz too.
Newcastle should be encouraged that Manchester United are already making plans without Shaw, as this will only make their task easier.