Asia and emerging markets will be key growth drivers for the digital camera market in the next few years as other markets become saturated, analysts predict.
But IDC warned that intensifying competition will force some companies out of the market.
The research firm said that strong demand would continue until at least 2008, when it expects 111 million digital cameras to be shipped.
As growth slows in Europe, the US and other older markets, IDC expects that 40 per cent of shipments will be to newer markets in Asia and the rest of the world by 2010.
The latest market research suggests that 60 per cent of people in more affluent markets already own a digital camera.
IDC warned that, although manufacturers could expect several more years of growth, they would eventually face a global slowdown as the new markets become saturated.
Many brand-name digital camera vendors have struggled to turn a profit in recent years, forcing them to outsource production.
Falling prices and continued growth are providing opportunities for contract manufacturers like Taiwan's Premier Image.
A strong roster of existing clients in Japan, and new customers like Sony, are helping the manufacturer move into the big league. KGI Securities in Taiwan predicted that Premier will grab 17 per cent of the global market this year.
"We expect Premier's full-year shipments to reach 15 million units, up 56 per cent, on the back of orders from Japanese clients Olympus, Fuji, Panasonic and Sony," the securities firm's analysts said in a research briefing.
Premier reported sales of $307m in the traditionally slow first quarter. Tight cost control helped to keep the company profitable despite tough competition, KGI said.
Premier devotes about 95 per cent of its output to products for brand-name customers, and only sells about five per cent under its own brand.