Laser assisted chemical etching (LACE) is used to etch a continuous graded channel, set inside a wide stripe graded-index and separate-confinement heterostructure (GRIN-SCH) for laser diodes, grown by metal organic chemical vapor deposition (MOCVD). After a procedure of growing-etching-regrowing, a two-part waveguide is formed inside such modified structure, that is characterized by a negative change in the lateral effective refractive index (ERI). This effects the cavity to work as an unstable resonator. Procedures on the photoetching process are described, including the GaAs photochemistry and the optical system, with special emphasis on the fabrication of the approximately parabolic channels, as this represents a novel step. We call the cavity fabricated by this method, the shaped unstable resonator (SHUR).