The worldwide glut in solar panels has finally reached China, which created the surplus.

Suntech Power Holdings, one of the world's largest manufacturers of solar panels, said it has failed to make payment on $541 million in bonds, which were due last Friday. In a statement, the manufacturer based in Wuxi, China, said it is working on "strategic alternatives" with lenders and potential investors. It's stock, which in 2007 traded above $80 a share on the New York Stock Exchange, closed at 59 cents on Tuesday, its lowest close on record.

Solar panelmakers worldwide have suffered as Chinese panels flooded the market. Plunging prices have forced companies worldwide to shut down operations or declare bankruptcy. In perhaps the most infamous case, California-based Solyndra received $528 million in Department of Energy loan guarantees and then went bankrupt in 2011.

Last year the US government imposed tariffs on Chinese solar manufacturers in an effort to curb the "dumping" of underpriced products.

"The long-term future for solar is bright, but the market is going through an adjustment period," Trevor Houser, a partner at Rhodium Group, a New York-based consultancy, said via telephone.

The falling prices of panels have had a positive effect on sales. In 2012, the US solar market grew by 76 percent, installing a record 3.3 gigawatts of capacity, enough to power more than 500,000 homes, according to the Solar Energy Industries Association (SEIA) and GTM Research.

“We’ve brought more new solar online in 2012 than in the three prior years combined," said Rhone Resch, president and CEO of SEIA, in a statement last week. "This sustained growth is enabling the solar industry to create thousands of good jobs and to provide clean, affordable energy for more families, businesses, utilities, and the military than ever before."

The demand just is not growing fast enough, leading to a global consolidation of solar panel manufacturers.

The news about Suntech suggests the consolidation is creeping into China, where government subsidies have long muted market realities. Other major Chinese producers including Yingli Green Energy Ltd., LDK Solar Co,. and Trina Solar Ltd. have reported heavy losses, according to the Associated Press.

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In the long run, the consolidation may be good for solar. As the market sorts through excess supply, panel prices will stabilize, offering the remaining American and European solar companies to compete with fewer artificially-cheap products.

"This is normal," said Mr. Houser, who leads Rhodium Group's energy and natural resources work. "This is what you would expect to see in a booming technology."