The divergence of top-tier and bottom-tier suppliers in the solar market has been extremely evident in the first quarter of 2012, and yesterday's earnings announcements showed that divergence again. Yingli Green Energy
The strong get stronger
Yingli posted a loss, like everyone else in the industry, but conditions are slowly improving. Shipments jumped 44% sequentially in the first quarter, and revenue reached $500 million. Gross margin was in line with Trina Solar
Further improvement will likely depend on how the Chinese government handles weaker companies like Hanwha SolarOne and LDK Solar. Short-term borrowings have propped up these companies, but they can't last long posting negative gross margins.
Hanwha's average module selling price fell to $0.84, an incredibly low number considering where we've come from, but that selling price led to a negative 9.4% gross margin. Operating margin was an incredible negative 27.5%, a hole I doubt the company can crawl out of.
As earnings season continues, JA Solar
As far as Chinese manufacturers go, Yingli is performing very well when compared to other solar companies. That doesn't mean that it will swing to a profit next quarter, but I would give it a good chance of emerging from the industry when the government decides how it is going to let the weaker chips fall.
Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.
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