The company is closing its Fab 1 manufacturing facility, and transferring equipment and staff from the unit to its Fab 2 facility. The company also operates a third facility, Fab 3.

The move comes as US manufacturer First Solar announced it would close its European manufacturing base, and after a number of other solar companies in the US and Europe filed for bankruptcy. Solar companies have been squeezed by a combination of slumping solar systems prices, and austerity measures in Europe which have led to many governments slashing financial support for solar.

Tom Werner, SunPower’s chief executive, said that reducing manufacturing costs and extending technology advantage remained a “top priority” for the company.

"This decision will enable us to rationalize our operating expenses, improve supply chain efficiency and lower our manufacturing cost per watt through scale advantages,” he said.

As part of the cost reduction programme, SunPower has also streamlined its manufacturing processes at its remaining Fab 2 and Fab 3 facilities. The new process will reduce the number of steps in manufacturing by 15% in all of its production lines by the end of 2012. Combined with additional yield and equipment efficiency improvements, the company said expects to achieve its goal of manufacturing its Maxeon Gen E cells at a cost of approximately $0.86 per Watt.

The step reduction programme is already in progress, with two production lines at the Fab 2 running under the new process and all 12 lines expected to be converted by the end of 2012.

Werner added: “The reduction of approximately 125 megawatts of nameplate capacity at Fab 1 will be partially offset by further improvement in yields and equipment efficiency in Fab 2 and Fab 3.”

SunPower, which is majority owned by France’s Total, is working with Deca Technologies, an electronics firm to find use of the Fab 1 facility. SunPower is a minority shareholder in Deca Technologies.