Canon , the world's largest maker of digital cameras, is exploring the possibility of launching a mirrorless model, featuring many of the capabilities of an upmarket single-lens reflex camera in a more compact body, a senior company executive said.

Masaya Maeda, head of Canon's camera division, also said the company had restored camera production to pre-quake levels at the end of June, after supply chain woes hampered output after the March 11 disaster, and it now plans to hike production capacity in Taiwan.

The planned increase in Taiwan would bring Canon's total single-lens reflex camera output capacity to 10 million units annually, from about 7 million units this year, Maeda told Reuters in an interview on Tuesday.

Rivals including Sony Corp offer mirrorless models, enabling them to market lucrative accessories such as lenses to consumers seeking to move upmarket from compact cameras, and speculation has simmered that Canon and Nikon, who dominate the high-end camera market, may follow suit.

Some analysts have warned that entering the emerging segment could expose Canon to more price competition. Maeda said he did not expect such a move 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 finally returned to pre-quake levels at the end of June, Maeda said, after parts shortages following the March 11 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 the April-June period 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. - Reuters