London, England - January 31, 2005 -- The market for AlGaInP laser diodes, a key element in optical drives, is expected to boom over the next five years as DVD sales stimulate demand. The new Strategy Analytics report, "The AlGaInP Laser Diode Market," identifies key applications and competitive issues that will result in a $1.5 billion global market for the devices by 2009.

Japanese vendors currently lead the market, having successfully leveraged their experience in opto-electronics, and their strengths in consumer electronics. However, Strategy Analytics foresees new competition from the many emerging producers in Taiwan and China that have focused on the multi-billion dollar opto-electronics market and are keen on developing their own semiconductor capability.

"Commodity LED production has already moved from Japan to lower-cost countries in Southeast Asia. Taiwanese and Chinese manufacturers will press for a similar migration of laser diode production and compete on price," according to Asif Anwar, Service Director for the Strategy Analytics GaAs Service. "Although consumer electronics production is a notoriously cost-conscious market, it is unlikely that customers will switch to use newer vendors in the short term," continues Mr. Anwar, "there are other ways that suppliers can lower customer costs. In addition, several important future design challenges are best left to established vendors." However, Mr. Anwar noted that there are geographical shifts in manufacturing that will be difficult for semiconductor vendors to ignore in the long-term.

The storage market dominates the demand for AlGaInP laser diodes for both stand-alone DVD players as well as DVD drives for PC use. Industrial and other applications include barcode scanning and various visible marking applications, which will remain small, but growing, markets.