In May, President Obama visited Solyndra&39's Fab 2 plant in Fremont, Calif. The plant was originally intended to run concurrently with its Fab 1 plant and expand production capability, but now the older Fab 1 plant is closing.

Thin-film solar-panel maker Solyndra will announce today it plans to close its Fab 1 plant in Fremont, Calif., The New York Times has reported.

The closing will result in 40 Solyndra employees being laid off. Another 150 subcontractors will not have their current work contracts renewed, according to the report.

But the news follows the opening of Solyndra's state-of-the-art Fab 2 plant near its original Fremont plant just weeks ago, which was built in part with a $535 million federal loan guarantee from the Department of Energy.

The Fab 2 plant, when fully operational, is capable of producing 500-megawatts worth of thin-film solar panels per year and employing about 1,000 people.

Solyndra makes thin-film flexible solar cells from CIGS (copper, indium, gallium, and selenide), not traditional photovoltaic cells made with silicon. Thin-film solar cells are typically less efficient than silicon solar cells, but because they have also been traditionally cheaper to install they maintained a competitive edge in the solar marketplace.

But a changing thin-film solar market, as well as a significant drop in the cost of traditional silicon solar cells, has changed that dynamic.

Solyndra has raised a total of $970 million in financing, and received another $573 million in the form of a loan guarantee from the Department of Energy, money that was appropriated in the Energy Act of 2005. The Department of Energy and the White House has held Solyndra up as a prime example of U.S. green-tech manufacturing innovation, investment, and job creation. President Obama made his "We've got to go back to making things" speech in May from the Fab 2 plant during a visit.

Concurrent with Solyndra's funding and ramp-up to production, several thin-film solar manufacturers in China have also been ramping up manufacturing in large part because of the Chinese government's well-documented push to invest in green tech.

Chinese thin-film solar manufacturer Suntech, for example, has announced several tech partnerships it says have improved the efficiency of its thin-film solar cells, as well as increased production volume resulting in significantly lower costs for its products.

In April PricewaterhouseCoopers, Solyndra's auditor, said the company was in debt at a rate that was unsustainable and needed to make significant adjustments if it was to be profitable long-term. In July the company canceled its planned IPO and announced that Solyndra founding CEO Chris Gronet would be stepping down to be replaced by Brian Harrison.

The decrease in cost to install conventional PVs, combined with this recent introduction of cheaper thin-film solar products from China, has been closing the competitive gap. Solyndra's high-tech Fab 2 plant will reduce production costs compared to its old facility, Harrison told The New York Times.

"Fab 2 is much more efficient and cost-effective than our existing facility," he said.