Dec. 19 (Bloomberg) -- Sharp Corp., Japan's largest maker of liquid-crystal display televisions, will start producing blue laser diodes used in high-definition DVD devices such as those made by Sony Corp. and Toshiba Corp.

Sharp will spend ``several billion yen'' to build a dedicated line for the diodes at its Mihara factory in Hiroshima, southwestern Japan, spokeswoman Miyuki Nakayama said today, confirming an earlier report by the Nikkei newspaper. Production will begin this year with about 150,000 units a month and will be expanded to 500,000 units by September 2007, she said.

The company is challenging Nichia Corp. and other companies that make the devices in a market that's expected to expand as consumers switch to high-definition discs that offer sharper picture quality and greater recording capacity. Sony, which backs the Blu-ray DVD standard against Toshiba's HD DVD, has said a shortage of the diodes for use in its PlayStation 3 console forced it to delay the product's debut in Europe.

Sales of the diodes at Sharp will reach 15 billion yen ($127 million) in the first fiscal year, the report said, without specifying. Nakayama declined to confirm or deny the revenue target, calling the figure ``speculation'' by the Nikkei.

Blu-Ray Recorder

Sharp, based in Osaka, in September said it would start selling its own recorders that use Blu-ray discs early next year. Samsung Electronics Co., Apple Computer Inc. and Dell Inc. support the Blu-ray format, and the HD DVD standard is backed by Intel Corp. and Microsoft Corp. Most of the diodes will be used for Sharp devices, Nakayama said.

The Blu-ray disc can store at least five times more data than a standard DVD, and Toshiba's HD DVD can contain at least three times more content, making pictures crisper and sharper. Sony and Toshiba are promoting the discs as a way to deliver high-definition movies and video games and spur demand for flat- panel televisions that display the high-definition standard.

Global sales of laser diodes, including blue lasers, is expected to almost double to $6.07 billion in 2012 from $3.2 billion last year, according to market researcher Frost & Sullivan. Blue lasers for consumer electronics will drive demand, the report said.

To contact the reporter on this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net.

Last Updated: December 18, 2006 21:22 EST