Canon, the world's top camera-maker, is exploring the possibility of launching a mirrorless model, packing many of the capabilities of an upmarket single-lens reflex camera into a more compact body, a senior executive said.

Canon has restored camera production to pre-quake levels at the end of June, after supply-chain woes hampered output following the March 11 disaster, Masaya Maeda, head of Canon's camera division, told Reuters in an interview on Tuesday.

The company now plans to hike production capacity in Taiwan and this would bring Canon's total single-lens reflex camera output capacity to10 million units annually, from about 7 million units this year, Maeda said.

Rivals including Sony Corp offer mirrorless models, enabling them to market lucrative accessories such as lenses to consumers who are seeking to move upmarket from compact cameras, but unwilling to carry around a hefty interchangeable lens model.

There was speculation that Canon and Nikon, which together account for three quarters of the high-end camera market, may follow suit.

Some analysts have warned that entering the emerging segment could expose Canon to more price competition, but others say the firm's reputation among camera fans will help it overcome this risk.

If they market it properly, and differentiate it from other products, it will be positive, said analyst Tetsuya Wadaki of Nomura Securities in Tokyo.

The market reputation of Canon's cameras is on a different level from other manufacturers, he added.

People who hadn't considered a mirrorless before will probably buy it. But Canon have to be careful not to cannibalize sales of high-end compacts, where they make quite a bit of profit.

Maeda said he did not expect a move into the mirrorless segment would push down unit prices.

We are considering the technical aspects, Maeda said, when asked about the mirrorless segment.

We will launch an interesting product next year, he said, adding that it would be small, but not specifying whether it would be a mirrorless model.

Canon's production of cameras returned to pre-quake levels at the end of June, Maeda said, after parts shortages following the earthquake and tsunami forced it to halt manufacturing at its plants on the southern island of Kyushu for about 10 days and hampered production for months.

Following the disaster, the company was forced to lower its annual camera sales forecast for the year to 27 million units from an initial 30 million units, because a hiatus in supplies of a connector used in compact cameras cut the number of units it was able to make in April-June by 3 million, Maeda said.

With production back to normal, he said he hoped to achieve the original target, but added that the company is not ready to change its forecast at this point.

Canon produces all its mid- to high-level cameras in Japan, while entry-level models are manufactured abroad.

Following the disaster, the company is planning to spread its risk by shifting some production of entry-level models to Japan from Taiwan.

Canon is set to announce its April-June earnings on July 25, and the average analyst forecast is for an operating profit of 55.9 billion yen, based on six analysts polled by Thomson Reuters I/B/E/S, a fall of about 50 percent on the previous year.

(Editing by Chris Gallagher)

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