Canon to build $451 mln factory for key camera part

TOKYO, July 15 (Reuters) - Canon Inc. (7751.T) will invest about 55 billion yen ($451 million) to build a new factory in Japan to double its production capacity of image sensors used in digital cameras.

A spokesman for the world's largest digitial camera maker said it broke ground in May on a new building on an existing site in Kanagawa Prefecture near Tokyo and expected it to start operations in July 2008.

The factory will make complementary metal oxide semiconductors (CMOS), a component used in digital cameras and video cameras to convert light into an electric signal.

The new plant will have roughly the same annual production capacity as another factory in Kanagawa that can churn out 3 million CMOS chips a year, the spokesman said.

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).

Canon has procured CCDs from other suppliers such as Sony Corp. (6758.T), but it has been developing CMOS sensors for compact models as part of its strategy of bringing key component production in-house to lower costs.

Canon is aiming to produce 24 million digital cameras this year, including 3 million SLRs, which are high-end models that use interchangeable lenses.

((Reporting by Nathan Layne, editing by Ramthan Hussain; Reuters Messaging: nathan.layne.reuters.com@reuters.net; +81-3-3432-8231; nathan.layne@reuters.com))

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