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We derive formulas for the optical confinement factor Γ from Maxwell’s equations for TE and TM modes in the slab waveguide. The numerical results show that the formulas yield correct mode gain for the modes propagating in the waveguide. We also compare the formulas with the standard definition of Γ as the ratio of power flow in the active region to the total power flow. The results show that the standard definition will underestimate the difference of optical confinement factors between TE and TM modes, and will underestimate the difference of material gains necessary for polarization insensitive semiconductor laser amplifiers. It is important to use correct optical confinement factors for designing polarization insensitive semiconductor laser amplifiers. For vertical cavity surface‐emitting lasers, the numerical results show that Γ can be defined as the proportion of the product of the refractive index and the squared electric field in the active region. © 1996 American Institute of Physics.