General Electric Company (NYSE:GE)  had ambitious plans when it announced it would set up a 400 MW solar panel factory in Aurora, Colorado. However, the company has put the factory developments on hold for 18 months, General Electric Company spokeswoman Lindsay Theile told media.

The company last year acquired PrimeStar Solar and planned to use PrimeStar’s cadmium telluride technology to produce thin film solar panels in Colorado. Only last month, a company spokeswoman had told Gigaom.com that GE was still building the factory. But the company reconsidered its plans in recent weeks after a steep decline in solar prices and oversupply of panels from Chinese rivals.

The US market is overstuffed with cheap Chinese panels that have forced many small American solar firms out of business. Large firms are either lowering their production or exiting the solar panels business altogether. Last week, Colorado-based Abound Solar filed for Chapter 7 bankruptcy after it received federal loans of $70 million to expand manufacturing. Another company, Solyndra LLC had received $500 million in federal loans before filing for bankruptcy last September. The Solyndra bankruptcy has became a heated political topic.

Difficult situations prompted many American firms, including the US arm of SolarWorld AG (ETR:SWV) (FRA:SWA), to file trade case against the low cost Chinese competitors. The case is still pending.

A unit of  Berkshire Hathaway Inc. (NYSE:BRK.A) (BRL.B), MidAmerican Energy has entered the renewable-energy business by lending money to First Solar, Inc. (NASDAQ:FSLR), a California-based solar farm, a few months ago.

GE will use this holding period of 18 months to improve the efficiency of its cadmium-telluride solar panels, says Danielle Merfeld, the head of solar technology at GE. Company plans to re-start the factory in 2014; however it will not produce solar panels at a mass scale initially.

General Electric has also laid off employees from its solar team; Merfeld declined to disclose the exact numbers. “We are banking on the fact that with the technology improvement and our investment in technology today, we will put out more competitive products coming out of that factory,” Merfeld added.

The prices of solar panels have declined as much as 50 percent in last one year alone, and according to GTM Research, the problem of oversupply will continue in the years to come.