Slowing DVD, PC Markets Halt Laser Diode Growth Dec 10, 2004

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According to research from Strategy Analytics, the market for Aluminum Gallium Arsenide (AlGaAs) based laser diodes will grind to a halt by 2008, due to a combination of lowering ASPs, CD player market maturity, and the beginnings of a slowdown in the growth of DVD players and drives for PCs. All of this will translate into a CAAGR of only 0.1 percent for the 2003-2008 timeframe, the research company said.

Japanese manufacturers, including Sharp, Sanyo, Matsushita, and Sony, accounted for 76 percent of the world's total supply of AlGaAs laser diodes in 2003, focused primarily on optical storage applications for CD and DVD drives. However, Strategy Analytics says that established vendors face increasing competition from Taiwanese and Chinese suppliers, placing even greater pressure on ASPs.

"The entry of Chinese and Taiwanese vendors into the major CD & DVD drive markets will further reduce prices," notes Asif Anwar, director, GaAs Service. "The Japanese are already beginning to switch their focus toward next-generation optical storage markets based on Gallium Nitride technology."

Strategy Analytics sees a continued need for next-generation optical storage drives to be backwards compatible. While this will ensure continued demand for AlGaAs devices, ASPs will continue to be driven down.

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