The main subsidiary of China's Suntech Power, at one time the world's largest producer of solar panels, has declared bankruptcy.

The bankruptcy of Wuxi Suntech, which supplies more than 95 percent of Suntech Power's products, was reported by the official Xinhua news agency Wednesday.

Suntech Power, which is traded on the New York Stock Exchange, at its peak had a market capitalization of $16 billion. But the company was experiencing a drop in profits due to a global oversupply of solar panels, falling prices and anti-dumping tariffs imposed on China by the U.S. government.

Last Friday it failed to make payments on $541 million worth of convertible debt, the first time a major Chinese company had defaulted on its bonds.

"What the Suntech case shows us is that the Chinese companies are not too big to fail," Jenny Chase, head of solar analysis at Bloomberg New Energy Finance was quoted as saying by The Financial Times. "We are entering a period of great difficulty for Chinese solar manufacturers."

David King, the chief executive of Suntech Power, said in a statement that the company "will continue to work closely with all of our stakeholders and take the necessary steps to put Suntech back on track for growth," The New York Times reports.

Suntech at one time had 10,000 employees in Wuxi, China and had established an assembly plant in Arizona in 2010, the only Chinese module manufacturer with a plant in the U.S.

Last November, the U.S. International Trade Commission imposed tariffs of 35.97 percent on Suntech's solar cells produced in China, which were used in its modules made at the Arizona plant.

Europe has also accused China of dumping solar components into its market.

PV Tech reported last week that Suntech Power Holdings decided to permanently close its module assembly plant in Arizona, effective April 3, resulting in the loss of 43 jobs. The company cited the U.S. tariffs as one of the reasons for the closure.

E.L McDaniel, Managing Director of Suntech America said of the closure that "although it's a tough time to be a solar manufacturer, there's never been a better time to be a solar customer."

China had continued to support its solar industries amid restructuring and bankruptcy among American and European solar equipment manufacturers. But last December, China's State Council, or Chinese cabinet, had hinted that it would cease funding the country's money-losing solar panel makers, and instead encourage mergers among major companies.