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Solar earnings season is coming to a close, and for the most part the numbers looked pretty good for the second quarter. U.S. leaders like SunPower (SPWR 2.42%) and First Solar (FSLR -2.08%) posted solid results and expect 2016 to be a fairly good year with strong demand in the back half of the year.

But there's a lot of uncertainty surrounding 2017, and that may already be spreading its way into results from Chinese manufacturers Trina Solar (NYSE: TSL), Renesola (SOL), Hanwha Q-Cells (HQCL), and Yingli Green Energy (NYSE: YGE). These panel manufacturers have more exposure to the spot market for solar panels than U.S. rivals, which could lead to rough results the rest of this year and into next year.

What we know about selling solar panels in 2016

Right now, major solar manufacturers are making money. Trina Solar, Renesola, Hanwha Q-Cells, and Yingli all recently reported net income for the second quarter of 2016 and shipments and margins were strong. But this may be the peak for their results for the time being as some negative trends hit the industry.


Trina Solar 


Hanwha Q-Cells 

Yingli Green Energy 

MW Shipped

1,658.3 MW

282.4 MW of modules

423.3 MW of wafers


662 MW

Q2 Revenue

$961.6 million

$250 million

$638 million

$379.8 million

Q2 Gross Margin





Q2 Net Income

$40.3 million

$5.5 million

$76.8 million

$10.8 million

Q3 Guidance

1,550 MW-1,650 MW



300 MW-400 MW

Source: Company earnings releases.

Not all companies give the same MW shipment guidance, but the trends are similar across the board. Trina Solar and Yingli Green Energy expect shipments to be down sequentially in the third quarter, and Renesola lowered 2016 revenue guidance by $100 million to $900 million-$1 billion, indicating that its revenue from the second half of the year will be lower than the $510.7 million made in the first half.

This is troubling for a couple of reasons. First, fewer shipments means less revenue, lower capacity utilization, and lower margins in the future. With net margins already low it's likely these manufacturers will be losing money by the end of the year.

The more concerning trend is that sale prices for solar panels are falling, compounding the decline in sales and margins from selling less volume. With 2017 expected to be weak in the U.S. it's possible the industry will slow even more next year.

Beware the pitfalls in solar manufacturing

This is the downside of being a manufacturer in an industry where costs are falling and demand ebbs and flows. When times are good the manufacturing plant can run at full steam and when times get rough, things go bad quickly.

It could be a rough few months ahead for solar manufacturers, so investors should watch where margins trend and what companies are seeing for demand in 2017. If U.S. companies' results are any indication, there's a dip in demand ahead.