We're winding up another wild week for solar stocks. One more bankruptcy and another earnings dud made headlines, but news should be turning more positive in coming weeks. Demand is starting to pick up around the world as China, California, and recently Japan solidify solar programs.

Here's what happened around the solar industry that investors should know about.

Another one bites the dust
It seems like solar bankruptcies are a nearly weekly occurrence at this point, but this week's filing was a doozy. Solyndra, a manufacturer of CIGS-based modules, filed for Chapter 11 bankruptcy protection only two years after receiving a $535 million federal loan guarantee and will lay off 1,100 employees.

In another case of technology before profitability, Solyndra wasn't able to make CIGS or its cylindrical tubes work as efficiently as hoped, leading to financial trouble. We've seen Evergreen Solar, Energy Conversion Devices, and Solyndra tout superior technology in recent years only to see them fall on their faces financially. Keep that in mind next time you think about buying stock in a solar company that's still posting losses.

Bankruptcies may be seen as a bad thing for the industry, but it's just part of the natural progression to a sustainable business for manufacturers. When a nascent industry is growing like gangbusters and jumps out of the gate, all kinds of competitors rush in to grab a piece of the pie. As the industry makes a turn to sustainable growth the companies who aren't financially competitive fall off, and the survivors take a majority of the business.

It's happened before, it'll happen again, and as painful as it may seem, it's a good progression for the solar industry.

The end to a disappointing quarter
After LDK Solar (NYSE: LDK) reported earnings this week, I think it's safe to say we can move on from one of solar manufacturer's toughest quarters.

LDK reported revenue of $499.4 million, down 34.8% sequentially and 11.5% from last year. Gross margins were just 2.2%, and the company lost $47.9 million from operations.

Like JA Solar (Nasdaq: JASO), LDK was squeezed as prices for modules fell in the second quarter. That put wafer and cell suppliers in a tough spot, unable to command a reasonable price for their product.

Looking for differentiation
As module prices fall, every solar manufacturer is looking for a way to differentiate themselves from the competition. For example, First Solar (Nasdaq: FSLR) offers the lowest cost per watt, and SunPower (Nasdaq: SPWRA) is the highest efficiency manufacturer, both advantages for different parts of the market.

But differentiation is harder in China, where most manufacturers make modules that are very similar. Here are a few moves this week that manufacturers hope will help their products stand out.

  • Canadian Solar (Nasdaq: CSIQ) announced the official launch of new solar modules that feature 19.5% efficient solar cells. Canadian Solar is making great strides to not only cut costs but also to catch up with efficiency leader SunPower.
  • Trina Solar (NYSE: TSL) said it would introduce a new multicrystalline module next week that is based on a 60-cell module with 6-inch cells. Module efficiency has reached 15.9% with expected improvements in the future.
  • Suntech Power (NYSE: STP) will also be launching two new panels in its HiPerforma product line. The two panels have conversion efficiency of 15.2% and 14.8%, respectively.

Chinese manufacturers have been taking steps all year to increase efficiency, and these products illustrate the continued improvement.

Made in Europe
Speaking of differentiation, First Solar announced this week that its German plant met requirements to qualify for a 10% feed-in tariff premium in Italy. In a provision to keep manufacturing in Europe, First Solar's plant was awarded the premium because it uses at least 60% local content.

Every penny counts in solar developments, and this could help First Solar gain even more business in Italy.

Foolish bottom line
It's been a tough month for solar stocks, but the clouds appear to be lifting on manufacturers. Demand in the U.S. is picking up, China and Japan have announced feed-in tariffs, and the questions that plagued developers in Europe during the first half of the year have largely been answered.

Find out more about solar stocks by adding your favorite to My Watchlist.