Quantum well semiconductor lasers with a novel cladding design to achieve small output beam divergence and low threshold current, simultaneously are discussed. Cladding structures that cause expansion in the optical mode, while maintaining a good confinement factor, are reviewed. The design criteria and compromises are discussed in detail. The new structures offer much improved beam divergence along with low threshold current compared with conventional graded-index separate confinement heterostructure (GRINSCH) lasers. An optimized structure with the new cladding design can yield a far-field angle as low as 14.6° and a low threshold current density of 180 A cm-2.