Matsushita Electric Industrial, the maker of Panasonic electronics, plans to boost its digital camera output capacity by 75% from August.
It had a 3% global market share in 2003/04.
Matsushita plans to start production at a factory in eastern Japan next month with monthly output capacity of 150 000 cameras. That facility had been manufacturing portable CD players, but the company plans to shift that production to China. The changes will cost Matsushita "several hundreds" of millions of yen, a company spokesman said.
Osaka-based Matsushita lags consumer electronics rival Sony in digital cameras, but is optimistic that a tie-up with German lens maker Leica and a new line-up of smaller cameras will help it gain ground.
It aims to sell eight million digital cameras in 2006/07, which would represent a near eight-fold rise from the number it sold in the past business year.
Matsushita's push for a larger share comes as analysts warn of a possible supply glut in the digital camera market and increasing competition from low-cost Taiwanese competitors, such as Premier Image Technology and Altek.