The glut of supply in the solar panel market was brought on in large part by the Chinese government's efforts to promote the industry.
Communist leaders see renewable energy as a way to both generate higher-paying technology jobs and curb China's surging demand for imported oil and gas.
Attracted by tax breaks and subsidies, hundreds of small Chinese solar producers sprang up. New competitors were still entering the market as late as 2011, when weak demand and a supply glut forced producers to slash prices.
Other major Chinese producers including Yingli Green Energy Ltd., LDK Solar Co. and Trina Solar Ltd. have reported heavy losses. That has prompted expectations that the government will intervene and force companies to merge or shut down.
Prices of polysilicon wafers used to make solar cells plunged by 73 percent from 2010 to last year. The price of cells fell by 68 percent and that of modules by 57 percent.
Major manufacturers amassed debts of $17.5 billion, according to Maxim Group, a research firm in New York City.
Deep-pocketed Korean conglomerates are moving into the solar industry, adding still more competition.
Chinese producers also have been hit with U.S. anti-dumping tariffs imposed to offset what Washington says are improper subsidies from Beijing. European solar producers also have filed anti-dumping complaints, with the European Union asking for higher tariffs on Chinese imports.
Last week, Suntech announced the closure of its U.S. factory in Goodyear, Arizona, and the elimination of 43 jobs as a cost-cutting measure.