TOKYO, June 28 (Reuters) - For years, Japan's Fujifilm ( FUJIF )

pivoted away from its legacy camera business to focus

on healthcare. But thanks in large part to the TikTok crowd, its

retro-themed X100 digital cameras are now a roaring success,

boosting its bottom line.

Fujifilm ( FUJIF ) is struggling to meet demand for the $1,599 camera,

prized by young 20-something social media fans for its looks and

high-end functions.

The X100V model was so popular that in the fiscal year ended

in March, it was the imaging division, which includes cameras,

that was the biggest contributor to the company's record-high

profit - the unit accounted for 37% of operating profit in

fiscal 2023, versus 27% the year before.

After it sold out last year, the company increased

production in China to double the launch volume for the VI that

debuted in March, said Yujiro Igarashi, manager of Fujifilm's ( FUJIF )

professional imaging group. He declined to give details about

the production increase, or unit sales.

"We found that the orders far exceeded our forecast,"

Igarashi said. "In that sense, I was surprised that although we

doubled our preparations, it still came up short."

Founded 90 years ago, Fujifilm ( FUJIF ) competed against film

industry leader Kodak for decades before finally overtaking it

in sales in 2001. But the triumph proved short-lived, as the

film industry soon collapsed and digital cameras became a

standard feature in mobile phones.

To survive, Fujifilm ( FUJIF ) tapped its expertise in film chemicals

to shift into healthcare applications, a strategy also adopted

by domestic competitors Canon and Olympus. Fujifilm ( FUJIF ) didn't give

up on its cameras, but it cut 5,000 jobs in its film division

and moved most production to China the following year.

During the COVID years, Fujifilm ( FUJIF ) doubled down on antiviral

pills and vaccine operations, but now the cameras have put it

back into the spotlight.

The company projects imaging sales growth to slow to 2.2% in

fiscal 2024 from 14.5%, while operating profits in the segment

are expected to dip 1.9%, estimates analysts say are

conservative at best.

"We see downside risk to guidance for healthcare and

business innovation, but major upside for imaging," wrote

Jefferies analyst Masahiro Nakanomyo in June 6 report.

SAY CHEESE

The X100 was born in 2011 in an attempt to rescue Fujifilm's ( FUJIF )

professional grade camera division, but its appeal is rooted in

nostalgia, camera enthusiasts say.

"The look of it was pretty revolutionary, which is ironic,

because it's just mimicking a film camera," said Mark Condon,

founder of the camera equipment site Shotkit.

A key concept in retro tech is "friction", where the user is

joined with the product through physical touch and interaction,

according to Tokyo-based culture writer W. David Marx.

"Smartphones make it so easy to take photos that photos have

been devalued," said Marx, author of "Status and Culture".

"By having physical cameras again, and having to develop

film etc., it adds back friction, which adds back a sense of

value to casual photo taking."

As travel restarted after the pandemic, demand for cameras

shot up, and influencers on Instagram, TikTok and other social

media sites turned the X100 into a status symbol.

"It is important to have a good looking camera that inspires

you to want to take it out and shoot with it," said Benjamin

Lee, who goes by @itchban on TikTok where he has more than

600,000 followers. "The X100 series is basically a fashion

accessory you wear, on top of being a great camera."

Availability remains a problem.

Second-hand X100s sell for multiples of their list price on

auction sites and there are online message boards for fans

waiting for orders.

Fujifilm ( FUJIF ) chief executive Teiichi Goto hinted last month he

was happy to keep supply tight, pointing to Germany's Leica

brand cameras as a model for maintaining premium value.

"It would be quite unfortunate to manufacture too much and

lower the price," Goto said at the company's year-end earnings

presentation on May 9.

But the long waitlists and steep prices may drive customers

to competitors, such as Canon's G7X and Ricoh's ( RICOF ) GR series,

influencer Lee said. This week, Ricoh ( RICOF ) also announced the launch

of its first film camera in about 20 years, the Pentax 17.

Imaging group manager Igarashi acknowledged that production

volumes were a hurdle, but the design and complexity of the X100

make it hard to manufacture at scale.

"We're trying really hard to increase the number of people,

the number of production lines, and so on, but it's not taking

off as quickly as you would think," he said.