Sanyo is already the leading supplier of optical pick-ups for conventional DVD players and recorders based on red lasers, controlling an estimated 40% market share.
The company now plans to invest more than 10 billion ($96 million) over the next two years on equipment that will be used to mass-produce optical pick-ups for the next-generation equipment, claims the report.
Sanyo is a member of the high-definition (HD) DVD industry group, which is promoting technology developed by Toshiba and NEC. However, the Japanese report says that Sanyo will also make pick-ups for the rival Blu-ray Disc camp, which is based on technology developed by Sony and Matsushita Electric.
GaN-based blue lasers are expected to be manufactured in Japan at Sanyo's Tottori facility, with assembly lines to be fully-installed by summer 2005.
Sanyo will then gear up its Chinese production base to make the pick-ups containing the blue lasers.
Around 100 people are expected to be employed in Sanyo's optical pick-up design and development business by early next year.
Next-generation DVD machines based on both the rival formats are expected to be released commercially in the final quarter of 2005.