Japanese consumer electronics maker Sharp said on Tuesday it has started the commercial production of blue laser diodes, taking aim at a market with strong growth potential.

Sharp in November began volume output of blue laser diodes, used to read and write data on high-definition optical discs, at 150,000 units a month at its existing plant in western Japan, Sharp spokesman Hiroshi Takenami said.

The diodes can be used in DVD players based on the Blu-ray format, championed by Sony, as well as competing HD DVD technology, promoted by Toshiba.

Sharp, which is entering the market dominated by Sony and unlisted Nichia, plans to bring the monthly capacity to 500,000 units by the end of 2007, spending several billion yen.

Takenami declined to comment on Sharp's sales target, but the Nihon Keizai Shimbun business daily said the Osaka-based company aims for annual blue laser diode sales of about 15 billion yen ($127.2 million) at the initial stage.