Suntech Power plans to build a factory in the Phoenix area and start production in the third quarter of 2010.

The company hasn't settled on the location for the factory yet. That should come "in coming weeks," the company said.

The factory would start with a capacity to produce 30 megawatts of solar panels per year. Suntech executives have said previously that the company would ship solar cells from its China manufacturing complex to the U.S. factory for panel assembly.

It was back in May this year when Suntech formally announced its plan to set up a factory in the United States. In June, Suntech's Roger Efird said the company was planning a 100-megawatt factory that would start operating in the first quarter of 2010. The company had narrowed down the list of potential factory sites to Arizona and Texas before deciding on the former. 

The company said it's looking for a factory space of 80,000 to 100,000 square feet, which would enable Suntech to add production lines later if demand from the U.S. market improves.

Despite legislation that has created financial aid programs this year for manufacturing solar energy equipment and installing them, the U.S. market hasn't experienced a dramatic rise in demand. Many analysts and investors say the full impact of these federal grants and tax incentives won't likely be felt until next year.

Globally, the solar industry saw a decline in sales for the first time ever this year.