I've expressed my disappointment in the lack of compact digital cameras offering excellent image quality on several occasions. As I pointed out here, much of it has to do with sensor size. In particular, as a long-time Canon user I have been disappointed in the lack of innovation from Canon in the compact segment.

Canon has announced that it is building a new $451 million factory to build CMOS chips. From the Reuter's article: "The CMOS chips will be used in both single lens reflex (SLR) models as well as in some compact models. Canon's compact cameras have to date used a different type of image sensor called a charge-coupled device (CCD)." A CMOS versus CCD technical discussion is beyond the scope of this brief. What is interesting is that Canon plans to take control of its own sensor production for some compact models as well as to use the same sensor technology in some compact models as they do in DSLRs.

It remains to be seen whether Canon is bringing some of it compact camera sensor production in-house just to cut costs or also so that they can improve image quality. Hopefully they can do both.