Solar manufacturing in the North American market may slowly be making a comeback. And don't look now, but inflation is increasing in China, where most panels are made. Is a trend emerging or is this just happenstance?

Last week, Energy Conversion Devices (Nasdaq: ENER) announced it was building a facility in Ontario, Canada, partly to meet the domestic content requirement of the Ontario feed-in-tariff program. But even Energy Conversion Devices hasn't been consistent about where it will focus manufacturing in the future. The past year has seen plenty of change as weaker players cut costs and stronger ones move back home:

  • Evergreen Solar (Nasdaq: ESLR) shut down its Massachusetts manufacturing plant, deciding China was the place it had to be to compete.
  • First Solar (Nasdaq: FSLR) recently announced a new plant in Mesa, Ariz., that will produce 250 MW of modules, expanding its capabilities in the U.S.
  • Energy Conversion Devices moved some of its final assembly operations to Mexico last year to cut costs.
  • SunPower (Nasdaq: SPWRA) and Flextronics (Nasdaq: FLEX) recently had its new 75 MW plant in Milpitas, California dedicated by the governor and U.S. Energy secretary.

So, some firms are investing in the U.S. and Canada -- and some are fleeing as fast as they can.

One thing to keep an eye on is inflation in China, which would have different effects across the industry. Firms such as Hanwha SolarOne (Nasdaq: HSOL) and JinkoSolar (NYSE: JKS), which manufacture in China, could see costs rise as workers demand more money to cover higher living costs and as raw input prices rise. Meanwhile, manufacturers such as First Solar that have begun spreading manufacturing around the world will be partially insulated from those troubles.

California also recently put its weight behind solar energy, and that could help pull manufacturing domestically. And that's news Washington would love to hear.

Keep up on your favorite solar stock by adding it to My Watchlist, which will find all of our Foolish analysis on the stock.