UPDATE 2-Canon to build $140 mln camera plant - source

(Adds source-based confirmation, details, share price)

TOKYO, July 4 (Reuters) - Canon Inc 7751.T plans to spend some 15 billion yen ($141 million) to build a new digital camera plant in Japan, with production scheduled to begin by the end of 2009, a source close to the matter said on Friday.

Production capacity of the plant, to be located in Nagasaki prefecture on Japan’s southern major island of Kyushu, is not available, but the Nikkei business daily said the factory would be capable of making about 4 million digital cameras a year.

Canon, which offers IXY and EOS brand models, is the world’s largest digital camera maker, controlling 19 percent of the global market, according to research firm IDC.

But it faces fierce competition from Sony Corp 6758.T in compact models, and from Nikon Corp 7731.T in more lucrative single lens reflex cameras, which are high-end and have interchangeable lenses.

Canon aims to boost its digital camera sales by 20 percent in calendar 2008 to 29.4 million units.

The new plant would come as some domestic rivals such as Fujifilm Holdings Corp 4901.T move camera production overseas to cut costs.

Canon currently operates two digital camera production facilities in Japan, one in China and another in Malaysia.

Shares in Canon were flat at 5,260 yen in early afternoon trade, underperforming the Tokyo stock market's electrical machinery index .IELEC.T, which was up 0.2 percent. ($1=106.79 yen) (Reporting by Kentaro Hamada, Taiga Uranaka, Kiyoshi Takenaka; Editing by Brent Kininmont)