Canon to build new digital camera plant in Japan

TOKYO, July 7 (Reuters) - Japan's Canon Inc (7751.T: Quote, Profile, Research, Stock Buzz) said on Monday that it would invest 17.4 billion yen ($163 million) to build a new digital camera plant in western Japan to meet growing demand.

The announcement comes as little surprise after a source close to the matter said on Friday that the world's largest digital camera maker planned to construct a 15-billion-yen factory in Japan.

The plant, slated to come onstream in December 2009, will have capacity to make 4 million compact cameras a year, Canon said.

Although Canon initially will make only compact digital cameras at the new facility, it also plans to start manufacturing single lens reflex (SLR) models there in the future.

SLR cameras are high-end machines with interchangeable lenses.

Canon, which competes with Sony Corp (6758.T: Quote, Profile, Research, Stock Buzz) in compact models and with Nikon Corp (7731.T: Quote, Profile, Research, Stock Buzz) in more lucrative SLR cameras, aims to boost its digital camera sales by 20 percent in calendar 2008 to 29.4 million units.

Shares in Canon, maker of IXY and EOS brand digital cameras, ended trade up 1.5 percent at 5,320 yen, outperforming the Tokyo stock market's electrical machinery index , which gained 0.6 percent.

(Reporting by Kiyoshi Takenaka; Editing by Brent Kininmont)