Olympus Corp. fears sales of its compact cameras may fall by half next fiscal year, extending a decline as consumers increasingly use smartphones to take pictures.

Volume sales will drop to about 1.35 million units as early as the year starting in April, Chief Executive Officer Hiroyuki Sasa said in an interview in Tokyo on Monday. The company forecasts it will sell 2.7 million compact cameras this business year, falling 47 percent from the prior 12-month period.

Olympus joins Canon Inc., the world's largest camera maker, in projecting shrinking demand for compact models. Increased sales of higher-end mirrorless digital cameras will make up for the earnings shortfall, helping the camera division at Olympus break even this fiscal year, Sasa said.